Harrods boss says government burying heads in sand over VAT perk for tourists

By

Sandra Halliday

Published
May 17, 2023

We all know that retail in the UK is crying out for the reinstatement of the VAT-free shopping perk for tourists, and that the government is resisting its return. Now the boss of Harrods has accused the authorities of burying their heads in the sand over the issue. 

While it may feel somehow inevitable that the perk will return eventually (and almost returned under the short-lived Liz Truss administration), for now, high-end retail is losing millions as many affluent tourist prefer to visit European destinations such as France and Italy in order to be able to claim back the VAT on their purchases.

Harrods chief Michael Ward — who’s also chairman of Knightsbridge Partnership — told The Times that “we’re in the middle of a difficult time for the UK economy and the government should be seizing opportunities to grow. I think it might be time for them to wake up and smell the coffee”.

He was responding to Nigel Huddleston, the trade minister who’s also a former tourism minister, in a radio interview asking businesses for more “data and information” on how the scrapping of the VAT refund scheme is hurting the economy.

But Ward said retailers have already done that. He cited the independent report by Oxford Economics, commissioned by the Association of International Retail. This claimed the scheme would bring a benefit of around £350 million a year rather than costing the country £2 billion as the Treasury had estimated.

“We commissioned the piece of work by Oxford Economics, which clearly showed there was a benefit to the UK economy as a consequence of tax-free shopping,” Ward said. “Asking us for more figures when we’ve employed an external consultant is a bit, ‘haven’t really read my papers’. What we ask is that the Office for Budget Responsibility review that document and see whether our conclusions are correct. If they are, then they should reinstate tax-free shopping.”

In the radio interview this week, Huddleston had also said Chancellor Jeremy Hunt would consider whether to keep the current situation when he looks at tax policy for the autumn statement.