West End businesses renew plea for VAT-free shopping in London

The government said reinstating VAT-free shopping "could cost British taxpayers around £2bn a year"

Businesses have renewed their plea to the government to bring back VAT-free shopping in London this Christmas.

The New West End Company (NWEC), which represents hundreds of retailers in the West End, said reinstating the scheme could add £2.3bn to the UK economy.

However, the government said the scheme "could cost British taxpayers around £2bn a year", adding "VAT-free shopping does not directly benefit Brits".

It comes after London businesses made a similar request in September.

HM Treasury said one in 10 non-EU visitors used the previous scheme, which was estimated to have cost British taxpayers £0.5bn for 1.2m non-EU visitors in 2019.

Extending the scheme to the EU could potentially take the total cost up to around £1.4bn a year, the Treasury added.

But the NWEC argued UK businesses were now at a 20% price disadvantage compared with their European neighbours.

Dee Corsi, from the NWEC, said: "This is not just impacting West End retail but our whole tourism ecosystem, from hospitality and leisure to cultural attractions."

'Not an attraction'

She said a survey by the NWEC found nine in 10 West End businesses had been impacted more by the loss of tax-free shopping than the cost-of-living crisis, with nearly half reconsidering staffing requirements as a result.

"The government has the chance to create a new, best-in-class scheme which would put the UK on the front foot, whilst also generating substantial revenue for the Treasury.

"It is vital that it grasps this opportunity without delay, providing a much-needed boost for the whole of the UK, before long-term damage is done."

According to the business body, despite the lack of VAT-free shopping Christmas spending in the West End this year is expected to rise to £1.64bn, up from £1.55bn last year.

A Treasury spokesperson said: "VAT-free shopping does not directly benefit Brits - it lets foreign tourists who buy items in the UK claim back VAT as they return home.

"The scheme could cost British taxpayers around £2 billion a year, which is money we would need to find elsewhere to help fund.

"Furthermore, fewer than one in 10 non-EU visitors used the previous scheme, showing it's not a significant attraction for tourists."

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