Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment he has made of the potential effect on retailers in the UK of removing the reclaiming of VAT by customers on luxury good sales at custom points.

The Government has announced that the VAT Retail Export Scheme will not be extended to EU visitors, and will be withdrawn for all non-EU visitors, following the end of the transition period. However, retailers will continue to be able to offer VAT-free shopping to non-EU visitors who purchase items in store and have them sent direct to their overseas addresses and this will be available to EU visitors following the end of the transition period.

The detailed rationale for this change is included in the written ministerial statement and summary of responses to the recent consultation: https://questions-statements.parliament.uk/written-statements/detail/2020-09-11/hcws448 and https://www.gov.uk/government/consultations/a-consultation-on-duty-free-and-tax-free-goods-carried-by-passengers.

The Government recognises the challenge these businesses face. The Chancellor announced the Winter Economy Plan on 24 September. This includes an extension to the temporary 5 per cent reduced rate of VAT on goods and services supplied by the tourism and hospitality sectors from 12 January to 31 March 2021. This alone provides continued support for the cash flow and viability of over 150,000 businesses and protection for 2.4 million jobs in the tourism and hospitality sectors. The Plan also provides further support to businesses and jobs over the coming months.