A group of 16 UK retail giants has urged Rishi Sunak to U-turn on his plan to abolish the VAT refund for international visitors from next year.
The group – which includes the heads of Paul Smith, Ted Baker, The White Company, Fortnum and Mason and Charles Tyrwhitt – said abolishing the VAT refund would be “a hammer blow for the British fashion industry” and that “the UK will now become the least attractive market in Europe”.
Sunak announced earlier last month that the UK would no longer make shopping VAT-free for tourists after 31 December.
The rebate allowed tourists to get VAT back at the airport for any goods they had bought in the country while visiting.
The Treasury says it is costly and vulnerable to fraud, with around £3.5bn given back to consumers through the rebate scheme each year.
In a letter to Sunak, the 16 retail companies said abolishing the rebate would make the industry uncompetitive compared to other European nations who have similar schemes.
“International shoppers are extremely price sensitive and introducing a 20 per cent tax will encourage them to spend their money in Paris, Milan or Madrid rather than in Britain,” the letter read.
“Having earned a well-deserved reputation as the one of the world’s leading shopping destinations, the UK will now become the least attractive market in Europe at the very time we were told Brexit would give British businesses a competitive advantage.
“Removing an incentive for international shoppers to come here will affect jobs and livelihoods throughout the UK, at a time when we are already facing severe pressures brought on by the Covid-19 health crisis.”
The move will hit a retail sector that is already ailing from the coronavirus pandemic.
Tens of thousands of people in the sector have been made redundant, with companies such as Arcadia Group, Jack Wills and Burberry making job cuts.
Tory Cities of London and Westminster MP Nickie Aiken, whose constituency includes some of London’s largest shopping areas, told the Express that Sunak should U-turn on his VAT rebate decision.
She said: “I’m a low tax Conservative and I believe that low tax actually stimulates economies and therefore I would like to see this decision reversed and the whole scheme actually extended to the EU.”
Full list of companies who wrote to Sunak
Annoushka Ducas, Co-Founder – Annoushka
John Ayton, Chairman – Bremont
Nick Wheeler, Founder and Chairman – Charles Tyrwhitt
Ewan Venters, CEO – Fortnum & Mason
Joanne Milner, Chief Executive – Garrard
Aydin Kurdash, Owner – Gina
Dan Slater, Commercial Director – Hackett
Simon Cotton, CEO – Johnstons of Elgin
Adam Holdsworth, Owner and CEO – N. Peal
Ashley Long, MD – Paul Smith
Andrew Stewart, Trading Director – Rupert Sanderson
Xavier Rougeaux, CEO – Smythson
Caroline Campbell, Retail Director – Ted Baker
Mary Homer, CEO – The White Company
Jonathan Baker, Managing Director – Turnbull & Asser