Reason077

Goods shipped home are generally liable to pay VAT, and potentially other import tariffs, upon arrival in the country they're being shipped to. So this is only an advantage if your home country's VAT is significantly lower than UK VAT.

Heyden

Retailers have a good case that the removal of VAT refunds is costing them sales.

Shipping is not always an option. Retailing agreements sometimes prohibit sellers from shipping outside of a designated region. Barbour clothing, for example, cannot be shipped to Canada by UK retailers but they are happy to sell you Barbour products if you take them home yourself.

On a recent London visit I spotted a high-end watch. Less the VAT the price was attractive even with Canadian HST added when declaring it. However, having to pay both the VAT and Canadian taxes made the watch less expensive to buy at home. The dealer was uncertain if they could ship the watch and the prospect of shipping and insuring an item worth several thousand pounds was not appealing.

Internaut

Unfortunately, the government is forced to rob Peter to pay Paul* and the people who will pay this proposed APD are a tiny minority of the voting population. It’s cynical, but about as smart as the government can manage. Given the state of the economy, it won’t change much though. Think of it as a desperate, rear guard action from a government on the run.

* Don’t worry, Paul is due his double whammy, one way or another.

Internaut

You risk paying VAT and duty if the watch is shipped. The best way to avoid those is to walk through the border wearing it (and make sure it’s the only watch you have with you). Then of course there is the issue of packing and the all important paperwork.

Heyden

Wearing it across without declaring it would be a criminal act and, if caught, jeopardize my NEXUS/GE status which is more important than the thousand or two I'd save in Canadian taxes and duties. I'd also probably have to leave behind the box and paperwork. It would be easier to buy a watch in the EU where the VAT would be refunded and stay on the right side of the law when I returned home.

Arctic Troll

It's an interesting one for the government. I've no doubt that high end retailers are losing a certain amount of non-EU custom to the EU because of these changes. But if that custom didn't benefit the UK exchequer, either directly or indirectly, then does it matter to the government? Should it matter to the government?

As for tourism more widely, hotel occupancy rates in England are back to pre-pandemic (and pre-VAT change) levels, and room rates are as high as ever. The impact on the VAT changes to tourism is clearly negligible at most.

hfly

Hotel occupancy rates..............room rates as high as............?

What on Earth are you talking about? Rates are a Canard and for much of the last two years have had nothing to do with occupancy but often properties trying to make up for 2 years of Covid. Occupancy rates are still below 2019 levels overall. In any case regarding VAT, this is also a canard as people can be visiting just not buying anything of value to take with them! I know A LOT of people that are waiting until they hit the continent to buy things now because of the VAT thing, hell, just 2 months ago I waited to purchase something until I hit the continent, and it was a $900 item.

KARFA

Not to get too sidetracked here, but it would appear Arctic Troll is correct if looking at the figures for 2023 & 2024 so far compared to 2019.

https://www.visitbritain.org/researc...cupancy-latest

Silver Fox

Just this

And by "government" I include all 650 of them. Not a single one of them has demonstrated that they have a clue.

hfly

KArfa,

I briefly looked at two of those, I do not have time to look at every month to month, and while numbers from 2022-2023, and 2021-2022 have huge increases, I do not see any huge increases from 2019. I can see that there was a month that was up .1% from 2019, and that is about it, I also see 65% occupancy in their last month reported. Most hotels are not profitable, at under 70%. My point being that a point one percent gain for a single month 2019-2023 is absolutely nothing and that there has not been the great SURGE in hotel bookings justifying price increases as implied by Troll.

Heyden

VAT changes may have had a negligible impact on tourism overall but it has most likely had an impact on tourist retail spending. There is no incentive for a tourist in the UK to make purchases over their nation's exemption limit when they will be double taxed and could purchase the same item with a VAT return in the EU.

KARFA

the point - which you dismissed - was hotel occupancy rates in England are back to pre-pandemic levels - which if you looked at the numbers does appear to have some basis.

anyway, I don’t want to take the thread any further off topic.

Misco60

I agree: I think it is fairly clear from that document that hotel occupancy rates in England have pretty much returned to 2019 levels.

If you consider that prices generally have risen by around 25% since then, and the cost of energy - one of the biggest costs for any hotel - has doubled, then it is no surprise that hotel rates are high.

hfly

Leaving that aside, if I personally as recently as January deferred buying a $900 item, until I was on the continent a few days later, I can only imagine the overall impact (which many luxury good companies say is over THIRTY PERCENT of sales) and what it does to the economy. I do not know the economic impact of a loss of 30% of luxury sales (let alone sales full stop as my almost $900 purchase was not a "luxury" purchase) and declines in non-food, non-energy, etc retail sales overall of 2-5% each of the last two years overall in the economy, how many jobs it effects, how it effects the overall GDP of the country, whether these numbers contribute into tipping the country into recession, etc.

Personally I can say that since they got rid of the VAT rebate, I have probably spent $5000 fewer dollars in the UK on purchases. I still visit the UK at the same rate that I used to, just that other than food/drink/hotel/transport, I rarely spend any money on anything else of much value. The overall numbers showing a 6-7% reduction in overall retail sales (exempting food.fuel/etc) over the last two years seems to bear this out. Overall getting rid of the VAT refund has simply been stupid, as all it does is make sure that that money is not spent in the UK. Saying that it was to make EU citizens pay is also stupid, because all it does is direct that spending to other countries, and ignore the economic impacts that go far beyond just collecting VAT, things such as overall GDP, employment and little things like that. If I am Chanel and my sales are down 30%, eventually I am going to eliminate 30% of my locations, employees, local ad spend and whatever else, and the government is going to collect 30% less in rates, income tax and all sorts of other things.

NickB

Well, they would say that, wouldn't they? There was a good article by Chris GIles on the issue (and the wider Laffer curve debate) in the Financial Times a couple of days ago. It refers, in particular, to an OBR analysis that questions an Oxford Economics report funded by the Association of International Retail that attempted to demonstrate the advantages of a VAT exemption for retail exports. I think that the FT article itself is behind a paywall, but that is the conclusion Chris Giles reaches on this issue: