EUROPE: BREXIT


Duty free contends with VAT decision at Brexit crossroads


While the UK Government has finally committed to resurrecting duty free sales for EU-bound travellers in the event of a no deal Brexit, VAT on all other airside categories is set to remain. Luke Barras-Hill assesses the path ahead.


T


he UK’s path towards leaving the European Union has not been a smooth one to say the


very least; political twists and turns at every corner has dogged a process bereft of any decisive legislation. At press time, the 31 October


remains the deadline; still among a pack of manoeuvrable cards is a potential general election, deal or no deal; although the last seems less probable since a bill to block it received Royal Assent in September.


Muddying the waters Aside the political posturing in Westminster, the DF&TR industry finally received news in September from HM Treasury that duty free for EU-bound travellers would return should the UK leave the bloc without a deal. In that eventuality, excise duty and


tax on sales of alcohol and tobacco would be lifted on purchases made at UK ports, airports and international train stations. The Chancellor of the Exchequer


Sajid Javid also announced a consultation on the Treasury’s long- term duty free policy. Welcoming the development,


UK Travel Retail Forum (UKTRF) Chair François Bourienne said: “The industry has been campaigning for fair and sensible changes to the UK’s duty free structure for an extended period of time, and it is pleasing to see the Government provide the certainty our industry needs to prepare for a no-deal Brexit.” However, a critical sticking point


– correct at the time of writing – not to exempt VAT for other product categories sold airside is being treated with a high degree of concern. “With the EU already clearly signalling its intention to remove


OCTOBER 2019


The UK Government has committed to restoring duty free sales to EU-bound travellers, but it's not on the terms expected.


duty and tax from all airside products in the event of a no-deal Brexit, UK airports and retailers will be put at an immediate and significant competitive disadvantage against European competitors,” said Bourienne. The UKTRF is calling on the UK


Government to ‘urgently review’ its decision not to apply VAT relief to avoid throwing UK airports and retailers into an ‘inequitable’ position the day after Brexit.


‘Third country’, new rules As TRBusiness understands, the current legislation on the UK side will need to be amended to reflect duty free and tax paid rules on alcohol and tobacco, and other categories, respectively. Upon exiting the EU, the UK would assume third country status and would therefore be free to establish its own laws. “We don’t understand it, we’re not


happy with it and want some answers as to why this has to happen,” says a source close to the matter. “We don’t see any practical


reason why HMRC are doing this. We haven’t been given any answers


“Rules and regulations need to be in place, should a hard Brexit happen, that create fair and equitable conditions. We don’t think this is the right policy and will be hugely confusing for the passenger,”


Industry Source


to that yet. “Rules and regulations need to


be in place, should a hard Brexit happen, that create fair and equitable conditions. “We don’t think this is the right


policy and will be hugely confusing for the passenger who will get one price into the UK and one price out. “We don’t know how this will


work on cruise ships or ferries. We will keep going, trying to convince the Treasury that this is a retrograde step and not good for Britain. “From day one, UK airports will


be competing with their European counterparts with one hand tied behind their back.” «


Stay close to TRBusiness for further developments.


TRBUSINESS 71


François Bourienne, Chair, UKTRF.


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