Scrapping VAT-free shopping for overseas visitors is a ‘hammer blow’ to tourism and high streets, industry leaders have warned.
The move will slow the return of international visitors and cost the Government more in lost tax revenues elsewhere, they argued.
The then Chancellor Kwasi Kwarteng promised to reintroduce the tax break for tourists in the mini-Budget last month. It gave overseas visitors a refund of the 20 per cent VAT paid on goods bought around the country when returning home.
Hammer blow: Luxury brands such as Mulberry will be hit by the decision
But the move was reversed by Jeremy Hunt as he tore up his predecessor’s plans yesterday.
Paul Barnes, head of the Association of International Retail, said: ‘The decision to reverse plans to reintroduce VAT free shopping for international visitors will come as a hammer blow to UK tourism and the High Street.’
VAT-free shopping was scrapped by then Chancellor Rishi Sunak after the UK left the European Union. Chris Sanger, head of tax policy at consulting giant EY, said Hunt’s decision was ‘surprising’.
The British Retail Consortium said it was ‘disappointed’ by Hunt’s decision, which leaves the UK as one of the only countries in Europe without a tax-free shopping scheme.
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