MPs call for independent assessment into tax-free shopping

MPs have urged the Treasury to commission an independent assessment into the “full economic impact” of tax-free shopping on the UK economy.

During the Westminster Hall debate on tax-free shopping for international visitors held on 7 September, Sir Geoffrey Clifton-Brown, Conservative MP for the Cotswolds, said: “This is an important debate which I have campaigned on for the past few years following the government’s decision to end tax-free shopping for international visitors when we left the EU.

“We are now the only major European country that does not have tax-free shopping and the British economy is missing out as a result.”

Several hoteliers, including Henrik Muehle, managing director of Flemings Mayfair hotel in London, had told The Caterer in April that tourists are “bypassing London” as a result of the lack of tax-free shopping.

Sir Rocco Forte chairman of Rocco Forte Hotels, had also warned that tourists are "increasingly voting with their feet" by going to other European destinations, which has "actively harmed" the UK economy.

Clifton-Brown added: “My sole ask today, which is almost cost-free, is to commission an independent assessment either through the OBR or respected audit firm commissioned by the Treasury into the full economic aspect of tax-free shopping on UK figures.

“We need that independent review so that we do not miss out on what potentially could be a huge positive and instantaneous win for the UK economy. The government’s current decision is based on – I believe – inaccurate and incomplete figures.”

He said Britain being “20% more expensive for shopping than any other EU destination”, had slowed the recovery of not only the tourism industry, but also sectors such as culture, leisure and hospitality, which were some of the “hardest hit” during the pandemic.

“The EU is enjoying a Brexit bonus at Britain’s expense. We have a double whammy of British shoppers joining international shoppers to shop tax-free; British shoppers now spend £1b shopping tax-free in the EU,” he added.

Clifton-Brown was supported by Nickie Aiken, Conservative MP for the Cities of London and Westminster, who said: “We want to grow our leisure and hospitality sectors. I know speaking to other stakeholders they are all united in wanting tax-free shopping.”

Victoria Atkins, financial secretary to the Treasury, said “industry commissioned analyses have reached different conclusions”, making reference to the disparities between findings from the Oxford Economics report and the OBR into the benefits of tax free shopping.

She quoted official figures that showed the average tourist spend per visit has increased from £693 pre-pandemic to £848 in 2022, which marks an “increase of 8% in real terms”.

Atkins added: “International spending habits are not directly informed by VAT RES (Retail Export Scheme) habits. Post-pandemic recovery in the UK has been stronger than in the US and Canada.

“We want to make sure tourist experiences are as great as they can possibly be. One of the ways to reduce bureaucracy is through creating an exemption for visa requirements through new electronic travel authorisation schemes.”

In response, Clifton-Brown revealed he is prepared to ask the industry to “go through in depth” everything that Atkins discussed, which he will then use to form a a comprehensive statement to “discuss the dialogue further”.