Tom Athron, chief executive of Fortnum & Mason, warned in November that the retailer was preparing for a difficult summer. He said tourists who might have chosen to come to London during the Paris Olympics for a shopping trip without the tourist tax were now likely to choose to buy their designer goods on the Continent. Unlike in the UK, tourists can still claim back VAT on purchases in countries including France, Italy and Spain.
It comes after recent research revealed tourists were still coming to London’s shopping hubs but were not spending. Earlier this month, Mulberry blamed the tourist tax for contributing to a slump in revenues after it closed its Bond Street store last year.
The Treasury has previously argued that restoring VAT-free shopping would cost Britain around £2bn a year at a time, thwarting moves to pay down debt.
However, Mr Hunt recently said he would continue to accept representations and consider this new information carefully, amid concerns British brands are being hardest hit by the measure.
Insiders suggested this could be taken to mean that the Treasury would be looking again at the policy for the spring Budget.
A Treasury spokesman said: “We keep all taxes under review and recognise the value that retailers bring to Britain. That is why we announced a £4.3bn business rates package at Autumn Statement to support businesses and the high street.
“VAT-free shopping remains available for all non-UK visitors buying items in store and having them sent directly to their overseas address.”
Robert Johnson is a UK-based business writer specializing in finance and entrepreneurship. With an eye for market trends and a keen interest in the corporate world, he offers readers valuable insights into business developments.
