Challenges ahead for VAT free shopping scheme for foreign visitors to UK

VAT free shopping scheme combined with weakness of sterling will make UK shopping hub.

In his Mini-Budget on 23 September, Chancellor Kwasi Kwarteng unveiled a scheme for VAT free shopping for foreign visitors to the UK. The policy is a good one but potentially tricky to implement correctly as it involves a new digital system and HMRC’s record here is mixed.

The Chancellor’s modern, digital, VAT-free shopping scheme will be a welcome boost for the high street especially with the relative weakness of sterling, which already makes the UK an attractive tourist destination. Until Brexit the UK, as part of the EU, did operate the Retail Export Scheme for non-EU visitors, so we’re not breaking new ground here. Delivering the scheme does entail a new digital scheme in Great Britain and modernising the existing scheme in Northern Ireland.

Potentially the scheme could prove troublesome to implement. HMRC have been involved in many digital roll outs recently. We hope that delivery can be achieved in a relatively short time frame without some of the issues experienced in the bigger projects such as Making Tax Digital and the new Customs Declaration service.

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