| answer text |
<p>The Government has announced that the VAT Retail Export Scheme (RES) will not be
extended to EU visitors, and will be withdrawn for all non-EU visitors, following
the end of the transition period. However, retailers will continue to be able to offer
VAT-free shopping to non-EU visitors who purchase items in store and have them sent
direct to their overseas addresses and this will be available to EU visitors following
the end of the transition period.</p><p> </p><p>In 2019 HMRC estimate that VAT RES
refunds cost around £0.5billion in VAT for around 1.2million non-EU visitors. HMRC
also estimate that fewer than one in ten non-EU visitors use the VAT RES.</p><p> </p><p>In
2019 the ONS estimate there were substantially more EU visitors (24.8 million) than
non-EU passengers (16.0 million) to the UK. This implies an extension to EU residents
would significantly increase the cost by up to an estimated £0.9billion. This would
result in a large amount of deadweight loss by subsidising spending from EU visitors
which already happens without a refund mechanism in place, potentially taking the
total cost up to around £1.4billion per annum.</p><p> </p><p>The final costing will
be subject to scrutiny by the independent Office for Budget Responsibility and will
be set out at the next forecast.</p>
|
|
