UKTRF urges Government to review VAT decision following latest Brexit delay

By Andrew Pentol |

Brexit-UK-EU

The UKTRF has welcomed this latest extension to the Brexit deadline, but remains concerned about the Government’s decision to retain VAT on certain sales if a no-deal Brexit transpires.

The UK Travel Retail Forum (UKTRF) has welcomed yesterday’s (28 October 2019) extension of the Brexit deadline until 31 January 2020, but expressed continued concern at the UK Government’s unwillingness to axe plans to retain VAT from non-liquor and tobacco products airside in the event of a no-deal Brexit.

Concern was initially expressed over the Government’s decision to retain VAT on certain sales in the event of a hard Brexit, following the UK Treasury’s September announcement that duty free tobacco and alcohol would return if Britain left the EU without a deal.

Amid this latest extension to the Brexit deadline, meaning Britain will not leave EU on 31 October 2019, the UKTRF remains concerned about the Government’s stance on this particular issue.

OPPORTUNITY FOR CLARITY

In a statement forwarded to TRBusiness, Francois Bourienne, Chair, UKTRF said: “The extension of the Brexit deadline to January 2020 is an opportunity for the UK and EU to provide clarity to passengers and retailers.

“We remain very concerned that in the event of a no-deal Brexit the Government has declined to remove VAT from other product categories available airside, despite announcing the removal of duty and tax from alcohol and tobacco products earlier this year.”

He added: “Independent economic analysis has shown the duty free sector could contribute up to £900m-$1.1bn to the UK economy after Brexit, as well as generating approximately 9,300 new jobs. We continue to encourage the Government to urgently review its decision not to remove VAT from other categories and remain committed to working constructively with the Government to find a pragmatic solution as quickly as possible.”

Francois-Bourienne-UKTRF

Francois Bourienne, Chair, UKTRF believes the UK Government should abandon plans to retain VAT on certain sales in the event of a hard Brexit.

The European Travel Retail Confederation (ETRC) declined to comment on temporary UK rules in the event of a non-deal Brexit, but sent the following message to members yesterday morning following news of the Brexit deadline extension: “EU27 heads have agreed to grant a ‘Flextension’ to the UK until 31 January 2020 and the hope is that the UK will use its extra time wisely.

“In concrete terms, it means the UK will leave the EU at the latest on 31 January, but could also leave earlier if the ratification process (adoption by UK and EU Parliaments) is completed before – in which case Brexit could happen on the first day of the month following the ratification process.

“During the extension period, as was the case with the previous one, nothing changes in practise and the UK remains a full member of the European Union and current legislation and rules fully apply.”

Speaking to TRBusiness at the recent TFWA Cannes event during an exclusive video interview, John Rimmer, TFWA President praised the work of the industry associations including the ETRC and UKTRF in trying to obtain clarity on all issues relating to Brexit.

He said: “From a purely industry perspective, our colleagues in the various associations, particularly the ETRC and UKTRF have been working very hard to try and get some clarity from the authorities on what is going to happen to the duty free industry after Brexit, particularly in the event of a hard Brexit. My personal view is that from an industry perspective we are just trying to ensure there is clarity.”

GENERAL ELECTION POSSIBILITY?

Meanwhile, British Prime Minister Boris Johnson is expected to try again later today (29 October 2019) for a 12 December 2019 general election, after MPs rejected his plan yesterday evening. The Prime Minister is expected to publish a bill that would only need a simple majority to succeed — not two thirds as required in previous attempts. That said, he would still need support from the Liberal Democrats and Scottish National Party in order for it to pass.

Accepting the Brexit extension earlier on Monday, Johnson described it as an ‘unwanted prolongation’ of the UK’s membership of the EU. In a letter to EU officials, he also urged EU member states to make it clear that a further extension after 31 January 2020 is not possible.

Heathrow-T3-WDF-Dufry-store

UK airports could be at a significant disadvantage, should the UK Government not reverse its decision to decline VAT removal on airside products.

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