One hundred of Britain's biggest businesses call end of tourist tax

One hundred of Britain’s biggest business leaders call for Jeremy Hunt to scrap hated tourist tax amid demands for VAT-free shopping

• A hundred top UK firms have told the Chancellor to scrap the hated tourist tax  
• They are concerned about the loss of VAT-free shopping for international visitors

A hundred of the biggest names in retail, hospitality and tourism have now joined the campaign to bring back tax-free shopping for overseas tourists.

Another ten companies yesterday added their signatures to a letter to the Chancellor demanding he scraps the hated tourist tax, which they fear is holding back Britain’s economy.

They are concerned that the removal of VAT-free shopping for international visitors is driving tourists away from London to cities such as Paris, Madrid and Milan.

The latest signatories include the head of property of the historic Burlington Arcade off Piccadilly, and the chief executive of Edinburgh-based jewellers Hamilton & Inches.

This week the Daily Mail launched a ‘Scrap The Tourist Tax’ campaign in support of the firms urging the Government to think again. And yesterday former chancellor Sajid Javid became the latest senior politician to add his voice to the calls.

Chancellor Jeremy Hunt, despite admitting UK business taxes were too high, claimed it would be too ‘expensive’ to change the policy now

He said restoring VAT-free shopping would help to grow the economy, because it could generate more income than it would cost.

READ MORE: Jeremy Hunt signals new tax breaks for firms in bid to see off Tory rebellion

Mr Javid, who has also served as the culture and business secretary, told LBC’s Nick Ferrari: ‘I think it would be good to find a way to remove that, but I say that deliberately very carefully because I know as a former chancellor that you’ve got to just make sure that you’re getting enough income to pay for the services that people rightly expect.

‘But I think this is one that if you can remove it, it can actually generate more income and help to grow the economy. And I don’t think any other country in Europe… has a similar tax for tourist spending, so I think it will be good to find a way to remove it.’

Research suggests that bringing back tax-free shopping would bring a much-needed £4.1billion boost to the UK’s GDP and support 78,000 jobs. And, despite the Treasury claiming it would cost it £2billion in lost taxes, experts estimate there would in fact be a net gain to the Exchequer of at least £350million a year.

Former prime minister Liz Truss, London Mayor Sadiq Khan and Liberal Democrat leader Sir Ed Davey have already added their voices to the clamour, although the Labour Party refused to do so.

Burberry chairman Gerry Murphy said yesterday that the ‘perverse decision’ to scrap tax-free shopping in 2021 was diverting business from the UK to Europe.

‘Our business from American consumers has broadly recovered to pre-pandemic levels, but it has doubled in Paris,’ he told BBC Radio 4’s World At One.

‘When we look at tourism from the Middle East, the multiplier is two to three times in France and Paris to what we see in the UK. So we are seeing very graphic evidence of business being diverted to our Continental neighbours, as a direct consequence of making Britain much less attractive.’

Industry leaders say the decision to scrap VAT-free shopping for foreign visitors in 2021 means that London is now losing out on the post-Covid recovery in high-end retail and tourism being enjoyed by rival cities Paris and Milan

Mr Murphy said the industry disagrees with the Treasury’s estimates, adding: ‘We think that they have overestimated the cost of extending the VAT refund to Europeans and underestimated the damage that it is doing to our tourist shopping business.’

READ MORE: SIR ROCCO FORTE: The short sighted ‘Tourist Tax’ is driving away business from our shores. If the Chancellor wants to restore the country’s fortunes, he must act now

Shopping has traditionally been one of the most popular reasons for visiting the UK, but there are fears Britain is now missing out after the VAT refund scheme was abolished. The rebate benefited cities such as London, Manchester and Edinburgh – as well as out-of-town retail villages.

Research also suggests the tourist tax is hampering Britain’s economic recovery post-pandemic.

The letter to the Chancellor, organised by hotelier Sir Rocco Forte, states: ‘Every country remaining in the EU now offers tax-free shopping, while we don’t. Effectively, we have suddenly started charging 20 per cent more than other countries for the same goods. The Treasury claims this is saving the taxpayer £2billion a year, but this is misleading.

‘The visitors who have traditionally come from the US, Middle East, China and elsewhere to shop inject large sums into the broader economy, on top of what they spend on retail purchases.’

Adam Hug, Labour leader of Westminster City Council, said that, while pushing to bring-back tax-free shopping was not ‘immediately intuitive’, the ripple-effect benefits were clear. ‘Westminster is home to two major international retail centres – in the West End and Knightsbridge,’ he added. ‘The shopping that takes place in those centres has a massive ripple-effect through our local economy, in terms of people coming to shop, they stay to have dinner, they go and see a show.

‘It… ultimately helps to drive economic growth, helps local employment… and it helps keep Westminster and London going.

The TaxPayers’ Alliance also backed the campaign, saying the ‘tourist tax’ is a ‘punitive charge’ that is nowhere else in the EU.

A plea to the chancellor from 100 leading business chiefs 

Dear Chancellor, 

The pandemic placed most businesses under acute pressure, particularly those in the hospitality, retail, travel and tourism sectors which we represent. So, the Treasury’s decision in 2021 to end the longstanding scheme that allowed international tourists to shop tax-free was puzzling and ill-timed.

Liz Truss’s shortlived government announced plans to reintroduce the VAT rebate to boost the high street, but this has now been reversed.

Every country remaining in the EU now offers tax-free shopping, while we don’t. Effectively, we have suddenly started charging 20 per cent more than other countries do for the same goods. The Treasury claims this move is saving the taxpayer £2billion a year, but this is flawed and misleading. The foreign visitors who have traditionally come from the US, Middle East, China and elsewhere to shop for the best of British inject large sums into the broader economy, on top of what they spend on retail purchases.

Figures from Visit Britain show that shopping has traditionally been one of the most popular reasons cited for visiting the UK. Indeed, British business traditionally made £3.5billion in tax-free sales to tourists every year. The scheme benefited tourist hotspots like London, Manchester, and Edinburgh, as well as out of town shopping villages.

Visitors did not just spend in retail stores – their custom supported hotels, restaurants, and theatres. Oxford Economics has concluded that if all the economic impacts of a tax-free shopping scheme are taken into consideration, the UK would, in fact, benefit to the tune of hundreds of millions of pounds a year.

The impact of its removal is already being seen. It was depressing to witness a great British brand like Mulberry closing the doors of one of its flagship stores as a direct result of the loss of tax-free shopping, as it did earlier this year.

New research from tax-free shopping experts Global Blue shows the UK is losing out on the significant spending made by international travellers as global travel resumes. Paris, Madrid and Milan can’t believe their luck as the UK’s lack of tax-free shopping drives travellers to spend in Europe.

Data covering international visitors from the USA, Gulf Cooperation Council (GCC) and south-east Asia regions from a sample of 11 leading retailers shows that whilst the UK has recovered post-pandemic to 64 per cent of

2019 levels of consumer spending, Italy is at 79 per cent, Spain at 84 per cent and France, which is benefiting most from the UK Government’s decision to remove tax-free shopping, has recovered to 108 per cent.

Looking at individual nationalities, the differences become even more pronounced. For USA visitors, the UK is back to 101 per cent of 2019 spend. However, Italy is enjoying spending from US visitors at 190 per cent of 2019 levels. Spain is up to 201 per cent and France is at a staggering 226 per cent.

For GCC visitors, the UK is at only 65 per cent of 2019 levels whilst Spain is already at 158 per cent, Italy at 166 per cent, and France topping out at 198 per cent.

In addition, UK residents are starting to take advantage of tax-free shopping in Europe, with £450million disappearing from high streets.

It is clear that the removal of tax-free shopping is turning into an extraordinary own goal for the UK.

We understand that there are pressures on the public finances at the present time. But the evidence shows that reinstating tax-free shopping would be a win for both business and the taxpayer.

We call on you to think again.

Yours sincerely

• Sir Rocco Forte, Chairman, Rocco Forte Hotels
• Sean Doyle, CEO and Chairman, British Airways
• Thierry Andretta, CEO, Mulberry
• Neil Clifford, CEO, Kurt Geiger
• Caroline Rush, CEO, British Fashion Council
• Alex Beard, CEO, Royal Opera House
• Anya Hindmarch, Founder & CEO, Anya Hindmarch
• Fraser Brown, Retail Director, Heathrow Airport 
• Sir Paul Smith, Designer, Paul Smith
• Tom Athron, CEO, Fortnum & Mason
• Jonathan Akeroyd, CEO, Burberry
• Helen Brocklebank, CEO, Walpole
• Hannah Colman, CEO, Jimmy Choo
• Christopher Cowdray, CEO, Dorchester Collection
• Dee Corsi, CEO, New West End Company
• Paul Barnes, CEO, Association of International Retail
• Gianfilippo Testa, CEO, Alexander McQueen
• Paul Jackson, General Manager, Claridge’s
• Manju Malhotra, CEO, Harvey Nichols
• John Durnin, Business Director, Bicester Village
• Knut Wylde, General Manager, The Berkeley
• Eric Heerema, Chairman and CEO, Nyetimber
• Kiki McDonough, Founder and Creative Director, Kiki McDonough
• Sandeep Bhalla, General Manager, The Connaught
• Theo Fennell, Founder, Theo Fennell
• Andrew Stembridge, Executive Director, Iconic Luxury Hotels
• Franck X Arnold, Regional Vice President and Managing Director, The Savoy London
• Christian Bachler, Executive Vice President, Wedgwood
• Guillaume Marly, Managing Director, Hotel Café Royal
• Andrew Henning, General Manager, Grosvenor House Suites
• Antony Lindsay, CEO, Fabergé
• Thomas Kochs, Managing Director, Corinthia London
• Michael Wainwright, Managing Director, Boodles
• Philipp and Mark Mosimann, Mosimann’s Private Dining Club
• Michael Bonsor, Managing Director, Rosewood London
• Claire German, CEO, Design Centre Chelsea Harbour
• Julia Carrick, CEO, Julia Carrick Luxury
• Hugh Seaborn, CVO and CEO, Cadogan
• Joanne Rees, Managing Director, Elizabeth Gage
• Trevor Pickett, CEO, Pickett
• Brian Duffy, CEO, Watches of Switzerland Group 
• Pamela Harper, Chairman and CEO,
• Halcyon Days and The Caverswall China Company
• Giles English, Co-Founder, Bremont Watch Company
• Chris Roberts, Managing Director, Como Holdings
• Sophia Hirsh, Managing Director, Hirsh London
• Nicholas Bond, Owner and Director, Franchetti Bond
• George Somlo, Director, Somlo Antiques London
• Adil Mehboob-Khan, CEO, Liberty London
• Luca Donnini, CEO, Temperley London
• Derrick Hardman, Managing Director, Global Blue (UK)
• David Edwards, Managing Director, Seiko UK
• Robert Ettinger, CEO, Ettinger London
• Charlie Pragnell, Managing Director, Pragnell
• Annoushka Ducas, Founder and Creative Director, Annoushka Jewellery
• Erdem Moralioglu, Designer and Philippa Nixon, CEO, Erdem
• Sean Gilbertson, CEO, Gemfields
• Adrian Maronneau, Managing Director, Bucherer UK
• Nicholas Brooke, CEO, Sunspel Limited
• Simon Cundey, Managing Director, Henry Poole
• Martin Mason, Managing Director, Tricker’s
• Sacha Rose, CEO, Derek Rose Ltd
• Charlie Holland, CEO, Gusbourne Fine English Wines
• Julian Moore, Managing Director, DR Harris
• Hilary Freeman, Managing Director, Edward Green
• Jamie Gill, Executive Director, Roksanda
• Chris Gaffney, CEO, Johnstons of Elgin
• Steven Medway, Chief Executive, Knightsbridge Partnership and King’s Road Partnership
• Baton Berisha, CEO, The Wolseley Hospitality Group
• Jonathan Reekie, Director, Somerset House Trust
• Chrissie Rucker, Founder, and Mary Homer, CEO, The White Company
• Philip Mould, Founder, Philip Mould and Company
• Prudence Gibson, Founder and Creative Director, E P O K 
• Ewan Venters, CEO, Hauser and Wirth
• Jeremy Morris, CEO and Creative Director, David Morris Jewels
• Emma Willis, Owner, Emma Willis
• Joanne Taylor-Stagg, General Manager, The Athenaeum Hotel and Residences
• Mark Evans, Managing Director, Bentley and Skinner
• Ben Dalrymple, Managing Director, Lock and Co. Hatters
• Emmy Scarterfield, Designer, and Dickie Higgins, Managing Director, Emmy London
• Henry Deakin, Managing Director, Deakin and Francis
• Dean Girling, Director, Gaziano and Girling
• Sue Medway, Director, Chelsea Physic Garden 
• Archie Hewlett, Founder, Duke and Dexter
• Fedro Gaudenzi, Founder and Director, Fedro Gaudenzi
• Jonathan Church, Joint Managing Director, Cheaney Shoes Ltd
• Irene Mateides, Founder and Publishing Director, FMS
• Robert Ogden, Executive Director, Richard Ogden Ltd
• Andrew Guest, Commercial Director, Thomas Goode and Co. Ltd
• Emma Fox, Chief Executive, Berry Bros. and Rudd
• Lalage Beaumont, Owner, Lalage Beaumont 
• Steve Murdoch, Head of Retail Operations, Crockett and Jones
• Roger Thornton, Head of Property, Burlington Arcade
• James Sleater, Director, Cad and The Dandy
• Victoria Houghton, CEO, Hamilton and Inches
• Natalie Lake, Managing Director, Really Wild Clothing
• Pippa Anderson, Owner, Pippa Anderson ■ 
• Joanna Wood, CEO, Joanna Wood 
• Tim Gosling, Director, Gosling 
• Emma Jane Knight, Founder, Emma Jane Knight
• Adam Holdsworth, Owner and Creative Director, N. Peal

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