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Kurt Geiger’s CEO has warned that scrapping tax-free shopping for tourists is having a “massively negative effect” on retail in the UK.
According to The Times, Neil Clifford said tourists were now travelling to other European countries for their shopping after the scheme was scrapped in 2021.
Under the scheme, international shoppers were able to claim back 20% VAT on their high street purchases. The scheme ended after the UK left the EU, however.
Clifford told The Times: “International tourists, whether it be Middle Eastern or American travellers, are spending less time in London. If you go to Milan or Paris or Madrid — my team and I are in those markets often — there’s no doubt they’re busier.”
He called the previous government’s move to scrap the scheme a “real shooting ourselves in the foot strategy”.
He added: “It really affected London, but actually right across the UK we saw that negative impact almost immediately. It is still having a massively negative effect.”
Earlier this year, more retail bosses warned the government that the decision not to restore tax-free shopping for international tourists will have a knock-on effect on other industries.
Janine Constantin-Russell, boss of the outlet shopping centre at the O2 Arena, accused the government of not paying attention to the consequences scrapping VAT-free shopping has had on the hospitality industry in the UK.
Harrods managing director Michael Ward also said he anticipates the scheme will not be reintroduced in the near future.
Ward suggested that the government should permit a third-party provider, such as Global Blue or Planet, to oversee a fresh tax refund scheme for tourists in the UK.
Before the Spring Budget was announced in March, chancellor Jeremy Hunt asked the Office for Budget Responsibility (OBR) to “examine the costs of benefits of the scheme”.
At that time, the Association of International Retail (AIR) and New West End Company had also submitted new evidence to Downing Street suggesting that the amount of lost VAT was going to be just one fifth of the Treasury’s projection because overseas shoppers spend less money on shopping than hotels and leisure.
