NEWS/ANALYSIS: BREXIT
Move to end UK airside tax free sales branded ‘short-sighted’
UK travel retail was left stunned in September after responses from a government consultation concluded that airside tax free sales (excluding liquor and tobacco) at airports for travellers departing England, Scotland and Wales would end in 2021. Luke Barras-Hill reports.
will have an impact upon our retail members and our airport partners. To do this at a time when the industry is on its knees is particularly short-sighted.” For the UKTRF, the consultation
Above: The government has said the VAT Retail Export Scheme (V
AT
RES) for overseas visitors in British shops will also end, although overseas visitors will still be able to purchase VAT-free items instore for shipment to overseas addresses. Source: LCY.
I
f the decimation to DF&TR revenues caused by the coronavirus (Covid-19) transport
shutdowns wasn’t enough, the UK is now faced with potentially disastrous consequences after the government announced the abolition of tax free sales (aside alcohol and tobacco) for all airside travellers, effective January 2021. Responses to a consultation
twinned with a ministerial statement issued on 11 September did at least caveat the bombshell with the confirmation that duty free sales would restore for passengers at Britain’s ports, airports, international train stations, on ships, trains and airlines. Reacting to the announcement on
tax free sales, a DFWC spokesperson told TRBusiness: “Without a doubt it
“Without a doubt it will have an impact upon our retail members and our airport partners. To do this at a time when the industry is on its knees is particularly short-sighted.”
Spokesperson, Duty Free World Council
22 TRBUSINESS
launched earlier this year was understood to be a way for the government to understand the potential benefits of the extension of the VAT-free system for passengers travelling from the UK to the EU, with the implication government was studying the option of standardising a VAT-free system for all destinations. “What wasn’t raised at any stage
in the written consultation or our numerous points of engagement with officials or ministers was the possibility that the VAT exemption would be withdrawn in its entirety,” said Cameron Gray, Secretary General, UKTRF.
UK Treasury comments The UK Treasury disputes this, with a spokesperson telling this publication: “The government published a consultation which ran from 11 March to 20 May and had a number of virtual meetings with stakeholders to hear their views. “The consultation document
also asked about the impacts of abolishing airside tax-free sales in particular. It asks an open question about whether we should extend airside tax-free sales and asks specifically about views and impacts of abolishing airside tax free sales.” [For more on the reasons cited by
government for the cessation of the extra-statutory concession, see TRBusiness. com – Ed]. Needless to say, the stakes have been raised considerably: critical
tax free sales categories such as perfumes & cosmetics are now under serious threat of disappearing. “Obviously, the vast majority of
the products we sell are not excisable and through the relief provided on VAT for those sales we can see that is a very important element that builds our industry and how it can be valuable and benefit businesses and passengers,” commented Julie Lassaigne, Secretary General at the European Travel Retail Confederation (ETRC). The DFWC and European Travel
Retail Confederation are urging all UK travel retail stakeholders to throw their full support behind the UK Travel Retail Forum as it leads the fight against the decision. “The legislation is not passed yet,”
said Lassaigne. “We are hopeful if the UK government understands the damage that policy could have they will overturn this decision.” Separately, one notable fillip
to stimulate the recovery of international air transport would be the return of duty free and tax free arrival shopping, something highlighted by Airports Council International (ACI) World in a recent policy brief. The brief, which commands the
full support of the DFWC, has also proposed a temporary relaxation of travellers’ duty free limits and allowances for selected duty free products to help airports generate extra income. The DFWC has confirmed it has
started to establish a ‘common position’ with IATA and ACI to persuade the UK government to review its announcement to abolish tax free shopping. «
OCTOBER 2020
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