In what has been described as a “hammer blow’ to the UK’s ailing aviation industry, the UK Government is set to end tax-free sales at airports, as well as sea ports and Eurostar stations from 1 January 2021.
With the Brexit transition period coming to an end this year, the government has justified its decision by citing concerns over how the benefit is passed on to passengers and in some instances, the relief is not consistent with international tax principles.
In addition, the VAT retail export scheme, which enables EU visitors to claim refunds on goods purchased in the UK will also be withdrawn from the beginning of 2021.
The Airport Operators Association (AOA) has criticised the move as “needlessly harming an industry in peril.”
Karen Dee, AOA’s CEO commented that, “The Government have once again shown a complete lack of awareness for the jobs and businesses on the line in the aviation sector Our industry is weathering the worst crisis in the history of civil aviation, it can scarcely afford another hammer blow like this.”
She added that by removing the airside statutory concession, the government is harming the revenue of retailers and ultimately airports. “Passengers will be disincentivised from making purchases as they travel through the UK.
“Many foreign visitors will now choose to go elsewhere, attracted by the beneficial tax and excise regimes of our European competitors. This will harm not only UK airports, but the high street stores that hugely benefit from tourists.”
The AOA is urging the government to reconsider its proposal and “act in partnership with its once world-beating aviation industry to secure jobs, businesses and livelihoods across the country.”