Last week, the Government said overseas visitors will no longer be able to reclaim the VAT paid on goods purchased in the UK, a move that could hit Liverpool and Cheshire Oaks retailers. Tony McDonough reports
Liverpool city region could lose up to £32m in retail revenues and see more than 600 jobs put at risk as a result of the abolition of tax free shopping for overseas visitors.
Last week, the UK Government last week announced the abolition of the VAT Retail Export Scheme (VAT RES) which currently allows international visitors to the UK to reclaim the VAT paid on goods purchased, but not consumed in the UK.
This will take effect from January 1, 2021 and the Association of International Retail (AIR) claims the change will have a devastating effect on retailers, many of whom are already struggling due to the COVID-19 crisis.
According to AIR, in 2019 international tourists spent £22bn in the UK, with Liverpool city region and Ellesmere Port attracting 7% of the amount spent on shopping outside of London. It includes Ellesmere Port due to the popularity of the large Cheshire Oaks designer outlet, which is popular with overseas visitors.
Last week LBN reported that Liverpool’s visitor economy had already taken a £1bn hit so far in 2020 due to COVID-19. There are fears tens of thousands of jobs could be at risk following the ending of the Government furlough scheme.
It calculates the area could lose £32m in sales with 640 retail jobs put at risk. According to tax free shopping expert Global Blue, China is one of Liverpool and Ellesmere Port’s biggest international markets accounting 38% of the total tax free shopping spend with an average transaction value of £348.26.
Other key markets include Kuwait 7%, Saudi Arabia 4% and Malaysia 3% all of which having an average transaction value of over £150. From 1 January 2021, Britain will be the only country in Europe not to offer tax free shopping, making UK cities a less attractive destination for business visitors and tourists.
AIR claims this will lead to fewer visits and of those who do visit, fewer will buy goods in the UK, waiting instead until they visit any other European country to make their purchases.
Paul Barnes, chief executive of AIR said: “The Government’s decision to eradicate tax free shopping in the UK will impact Britain’s reputation and appeal as a global shopping destination, providing further damage to our struggling economy.
“Outside of London, Liverpool and Ellesmere Port is a key tourist attraction for visitors, proven in the growing number of international flights to Liverpool airport. The removal of tax free shopping will not only impact the cities retail sector but be a huge blow for hotels and restaurants who are reliant on international visitors.”