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Burberry chairman Gerry Murphy said the removal of VAT-free shopping for tourists in the UK has “made the UK the least attractive shopping destination in Europe”, in an exchange at the Business Connect conference in London on Monday, where he urged UK prime minister Rishi Sunak to reconsider the decision.
Sunak, who scrapped VAT refunds for tourists at the start of 2021 while he was chancellor, said that he would prefer not to “rehash all the details” of that decision at the event but that he would look into the data. “We’re always happy to look at what’s happening on the ground and see if things are panning out as we expected them to or not,” he said.
The PM added that there were “good reasons” for the decision. At the time, the British government argued the scheme was costly, vulnerable to fraud and did not benefit areas of the UK with lower levels of tourism. The UK government and Sunak did not respond to requests for additional comments.
Burberry is one of many UK luxury companies that has rallied for the government to reinstate tax-free shopping for tourists. The sector has been arguing that the UK is losing tourist shoppers to Europe where there are better tax incentives for purchasing luxury goods. In May 2022, 250 luxury brands including Burberry, Alexander McQueen, Harrods and Net-a-Porter signed British luxury trade body Walpole’s campaign to reintroduce the tax-free shopping for tourists scheme. In September 2022, chancellor at the time Kwasi Kwarteng decided to reinstate the scheme, but it was scrapped again in October when Jeremy Hunt took over after Kwarteng was fired. In February 2023, Burberry was among 30 British businesses that signed a letter from Mayor of London Sadiq Khan to Hunt asking him to reinstate the scheme.
“We can see in our business — because we trade in Paris, in Milan, in Munich — the rate of recovery from Covid in those markets as well as the UK, and the UK is by far the weakest recovery of all those major markets. We didn’t see much impact on our business for the last couple of years because there wasn’t much tourism, but now there is, it’s coming back in spades,” said Murphy. “I would ask you, in the spirit of making Britain a more competitive environment, in the spirit of fostering growth — and not just in the luxury industry, it also knocks on to travel, hotels, airlines, airports — to reconsider that decision,” said Murphy.
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