Abolishing the VAT Retail Export Scheme (VAT RES)

    View Author September 2020

    Following a recent consultation on this issue, which closed on 20 May 2020, the UK government has announced that it will withdraw the VAT RES in Great Britain from 1 January 2021.

    The rules concerning the VAT RES enable non-EU visitors to the UK to purchase eligible goods (in essence, those that are for personal use only and will be exported as accompanied baggage) and either avoid or claim a rebate on UK VAT charged on those purchases.

    The exposure to the retail and tourism sectors resulting from this change is significant. It has been estimated that the annual spend by international visitors is more than £22 billion, and that 10% of this is on tax-free shopping.

    The knock-on impact from the withdrawal of the VAT RES could damage the attractiveness of UK retail, exacerbating the adverse effect already being felt as a result of the COVID-19 pandemic, the consequential recession and the ongoing uncertainty over the outcome of Brexit trade negotiations.

    Please download our PDF update for further information.

    We would welcome your feedback on the impact that this will have on your business, and are already working with a number of retailers to assess and mitigate the impact that this change presents for them.

    Please do not hesitate to contact Matthew Lewis, Head of Retail, to discuss this further.