Tax-free shopping is a major draw for international visitors and our global competitors understand that. Many countries offer to refund sales tax to international shoppers and they work hard to make that process as seamless as possible. In the UK, all international visitors from countries outside the EU can claim back their VAT in certain circumstances.
Digitalising the tax free shopping system
Most UK retailers have digitalised their tax-free shopping process (recording customers details and sales) but the UK Government has not yet digitalised its element of the scheme, using an outdated paper-based system for validating and processing tax-free refunds.
This leads to long queues at airport refund kiosks, leaving a bad impression on tourists as they leave the UK. The UK Government is one of the last to digitalise its element of the tax free shopping system.
AIR is campaigning for digitalising the tax-free shopping system in the most effective, cost-efficient and low-risk way for retailers.
Extending tax free shopping to visitors from EU member states after Britain leaves the EU
Over 70% of international visitors to the UK come from Europe. Currently they are excluded from the tax-free shopping scheme. As the UK determines its future relationship with the EU, AIR will work with the Government to extend tax-free shopping to visitors from EU member states.
Tax Refund Agency Global Blue estimate this change to be worth up to £1.4 billion in additional annual retail sales and up to £2.1 billion to the UK economy when the additional impact on the tourism industry is taken into account.
You can see AIR's response to the 2020 HMRC consultation on the future of tax free shopping here.
The law governing Sunday trading in the UK places some retail centres at a disadvantage compared to their international counterparts. Stores in England and Wales can open for no more than six consecutive hours between 10 am and 6pm on Sundays.
Most of the UK’s international retail competitors – such as New York, Milan, Dubai, Beijing, Tokyo – have no Sunday trading restrictions. In Scotland there are no restrictions on Sunday trading hours.
AIR will work to ensure that London’s two International Centres - Knightsbridge and the West End - are added to the existing list of exemptions from the Sunday Trading Act 1994. This significant but achievable legislative change would be worth an estimated £260 million in annual net additional sales in the West End alone and create over 2,000 new FTE jobs.
This quarter of a billion pound annual sales boost in the London International Centres will directly help high streets throughout the UK, particularly those struggling in the midlands and north of England. By generating significant additional revenue in these stores, national retail chains will be under less pressure to cut costs, stores and jobs in poorly performing areas in other parts of the UK.
Over time, AIR will work to extend exemptions to those areas with significant international retail demand, ensuring the UK remains competitive in retail tourism.
Visitors from some of the most important markets for international retail have to apply for a visa to visit the UK. Although the application system is relatively easy, leading to over 90% of applicants obtaining a visitor visa in key markets like China, and is continually being improved by the Government, we need to be constantly seeking enhancements which lower the visa application barrier while retaining Britain’s border security.
As the UK is not part of the Schengaen area, visitors wanting to make a multi-country tour of Europe need to apply for two visas if they wish to visit mainland Europe and the UK. Having to apply twice for two separate visas stops many individuals and tour operators from adding the UK to their multi-country tours.
AIR has incorporated the UK China Visa Alliance (UKCVA) which has worked for six years with the Government to increase Chinese visitor numbers. The UKCVA has helped to increase Chinese tourism to the UK by over 179% in five years through changes to UK visa policy and practices. That is compared to the 129% growth in the Schengen area.
UK visitor visas issued in China 2018
UK visitor visas issued in China 2012
AIR will work with the Government on innovations to visas, border queues and best practice to make it easier for travellers from all over the world to visit the UK’s retail hotspots.
Retailers with significant numbers of international shoppers know the value of having staff who can speak their customers’ language. Shoppers from China and the Gulf are driving growth in the international retail sector but our members struggle to recruit staff that speak Mandarin and Arabic.
And as the UK leaves the EU, it is likely to become more difficult for retailers to employ staff speaking European languages too.
AIR will make the case to the Government that the UK’s new post-Brexit immigration policy must help retailers get the staff they need from around the world.
We will also look to implement the proposals of a report by the UK China Visa Alliance in association with retail and hospitality groups to find ways of recruiting more Mandarin speakers.
Businesses and industry sectors are very conscious of their impact on the environment and the need to be constantly seeking ways to minimise carbon production and use of the World’s resources. It is responsible business practice and it is what their customers want to see.
AIR will work collaboratively with its supporters to ensure the international retail sector is making the right changes in a coordinated fashion. These changes will help to improve our collective environmental impact and AIR will ensure customers and other stakeholders are aware of the good work the industry is doing.