Policy paper

Revenue and Customs Brief 17 (2014): VAT Retail Export Scheme

Published 14 April 2014

This policy paper was withdrawn on 29 May 2015

This publication was originally archived on 14 April 2015.

This publication was originally archived on 14 April 2015.

Introduction

This brief updates stakeholders on the progress of HM Revenue and Customs (HMRC) review of the VAT Retail Export Scheme and sets out the next steps.

Who needs to read this?

Retailers, VAT refund companies and other individuals or bodies with an interest in the VAT Retail Export Scheme.

Background

The VAT Retail Export Scheme - also known as Tax Free Shopping - allows visitors from outside the EU to claim a refund of VAT on goods they buy and export from the EU in their personal luggage.

It was announced at Budget 2013 that HMRC would review the scheme, with the key objectives of improving the customer experience and protecting VAT revenue. A formal consultation ran from 1 July to 30 September 2013.

In its response to the consultation, the government acknowledged that a digital solution is the leading option for change and committed to continue exploring options for a digital solution. The government is clear that to ensure value for money to the UK taxpayer, implementing a digital solution will be dependent on a strong business case and finding an acceptable means of funding.

Alongside this commitment, HMRC announced plans to work closely with stakeholders to bring about key improvements to the scheme in the interim.

Next steps on the digital solution

HMRC has continued to work on the detailed responses from the formal consultation and has analysed proposals for a wide range of possible digital solutions. This valuable information is helping to develop the case for a digital solution.

Since the consultation closed, HMRC has continued to be contacted by companies interested in developing a digital solution. Although these contributions were received too late to feature in the consultation response document, there will be an opportunity for these companies to participate in the review going forward. Interested parties can email resconsultation.idt@hmrc.gsi.gov.uk to be included as a stakeholder.

HMRC is currently looking carefully at digital systems in operation in some other EU Member States. This will ensure that we benefit from the experience of, and learn lessons from, our EU colleagues. It will help us determine whether any aspects of those systems might be suitable for the UK.

As this work develops, HMRC will look to determine a number of high-level business - or system - requirements for a digital Retail Export Scheme in the UK. This work will inform whether there is a case for a Market Engagement Exercise where HMRC would invite suppliers to participate in a forum to gain their views on our requirements and possible delivery options.

As stated in the response document, the key to delivering any digital solution will be finding an approach that guarantees value for money for the UK taxpayer supported by an acceptable means of funding the development.

Improving the customer experience and protecting revenue

In April, HMRC will contact stakeholders to consider possible changes in the following areas:

Claim form

HMRC will look to simplify and standardise claim forms and also consider possible changes to the declaration and whether parts of the form could be completed away from the retailers premises.

Identification

Accepting alternative identification from overseas visitors.

Processes and signage:

Improving these at airports and ports.

HMRC guidance

Amendments to ensure it is up-to-date and accurate.

To ensure certainty for businesses, HMRC aims to negotiate and announce the forthcoming changes with stakeholder groups before the busy summer period. To allow businesses time to make any necessary systems changes (for example, to the layout of the claim forms), some changes will take effect after the summer and by October 2014.

Meeting with stakeholders

As part of the consultation, HMRC established three Stakeholder Interest Groups representing each of the main sectors using the Retail Export Scheme. These are retailers, refund companies and overseas visitors. HMRC will invite the participants of these groups to the next Open Forum session in May. The Forum will provide an update on the review, covering work on both the interim changes and the scoping of a digital solution, and there will be a Q and A session. Interested parties can email resconsultation.idt@hmrc.gsi.gov.uk to be included as a stakeholder.

Issued 14 April 2014