Government should support UK fashion industry by bringing back ‘tax-free’ shopping VAT relief

Gabby Donald, Corporate Tax Partner said:

London Fashion Week celebrated its 40th birthday this year, and in turn the UK Government should celebrate the fashion industry by supporting its growth. Research by Oxford Economics, commissioned by the UK Fashion and Textile Association shows that the UK fashion and textile industry contributes £62bn to the UK economy, supporting 1 in every 25 jobs in the UK and raising more than £23bn in tax revenues.

With the sector making such a valuable contribution to the UK economy, the new Government should seize the opportunity to support the growth of the sector. The previous Government’s policy of removing the ‘tax free’ shopping VAT relief for international tourists must be reversed. This would make the UK competitive with EU countries, which retain this VAT relief, and an attractive destination for international consumers.

Redesigning this VAT relief also offers a real opportunity to introduce a technology enabled solution – improving the experiences of consumers, while also reducing the administrative burden on HMRC.

Reintroducing this relief should be seriously considered by the Government as it offers real potential to boost growth in such an important sector of our economy. Bringing in a new VAT free shopping relief offers the opportunity to redesign the scheme and implement a digital solution for the benefit of both HMRC and consumers.

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If you would like to discuss any of the above, please speak to your usual Blick Rothenberg contact or Gabby Donald using the form below.