Harvey Nichols boss Manju Malhotra has warned the UK will “lose another summer” of business as international shoppers get “into the habit” of buying their designer goods in Paris and Milan over London
The chief executive has become the latest luxury retail boss to call on the UK government to reintroduce tax-free shopping for foreign shoppers after it was scrapped following Brexit.
In an interview with The Telegraph, Malhotra urged the government to prioritise the issue before an election – which could happen as early as May next year.
“Tourists are spending less time and less money in the UK. There is talk of a change being considered as part of a review of tax policy but the timing is not clear.”
“We don’t want to lose another summer,” she warned.
The recent call comes after figures from tax refund company Global Blue revealed spending by international tourists in France has bounced back to pre-pandemic levels, whereas it is only running 64% of previous levels in the UK.
Meanwhile, UK shoppers are taking advantage of the tax-free shopping rules in the EU to purchase their designer goods with spending up 200% last year compared to levels in 2021.
The Harvey Nichols chief executive praised France for being “really clever” in making it easier for foreign shoppers to reclaim VAT in Paris, which have included installing booths at Gare du Nord station inside the Eurostar departure lounge.
The Treasury has rejected calls for changes to the “tourist tax”, claiming a reintroducing would cost UK taxpayers “around £1.4bn a year, meaning taxes would need to go up for it at a time when we’ve already taken difficult decisions to get debt falling”.
MPs are set to debate the policy at Westminster Hall on 7 September.
Malhotra agreed with suggestions put forward by Burberry that the government should consider alternatives, such as offering international shoppers vouchers as compensation for not receiving the VAT back.
She said whatever scheme is adopted “needs to be practical”.
Currently, foreign shoppers can buy items in store and have them shipped back to their home country to claim back VAT, however, Malhotra said the shoppers “don’t want to do that, they want to wear their new dress or their new bag now”.
“Any tax-free equivalent must ultimately be simple and easy to use. Because if it isn’t, well then customers just won’t use it.”