High court dismisses attempt to salvage tax-free shopping

By

Sandra Halliday

Published
Dec 1, 2020

The end of tax-free shopping for tourists in the UK that's due to happen in the New Year came a step closer this week. The High Court has dismissed a claim that the government didn't consider the “devastating impact” of the rule change on both the retail and travel sectors.

The case was brought by a number of interested parties, including Heathrow airport, retailer World Duty Free Group, and tax-free shopping facilitator Global Blue.

Heathrow Airport is applying for a judicial review of the decision, Retail Gazette reported.

On January 1, non-EU tourists who were previously able to claim back the VAT on their UK purchases while at the airport won't be able to do so. They can only claim the tax back if they choose the option of shipping the goods home at the point of purchase. Retailers have said that there’s no interest in this option among tourist shoppers.

The government has said that the new measures will bring it into line with usual practice abroad, although they would also make Britain the only country in Europe not to operate a tax-free shopping regime of the type that’s about to end.

The three companies had argued in court that the new rules could cost around 46,000 jobs and possibly as many as 60,000.

Coming at a time when retail jobs are being lost at a super-fast rate, that’s a devastating prospect.

The companies had also said the decision to change the rules was irrational, wasn't based on evidence and didn't take relevant factors into account, Retail Gazette reported.

The government continues to cite a consultation that took place in the spring, although retailers and other organisations involved in this have said that it was misleading and made them think that the existing tax-free shopping rules might be extended to EU tourists.

However, as of January 1, EU tourists will be able to access VAT-free goods if they use the ship home option rather than carrying the goods in their luggage.