Customs remind retailers of changes to Tax Free shopping

Changes to the VAT Retail Export Scheme come into force today. Often advertised as ’tax free shopping’ the scheme allows overseas visitors to the UK to claim the VAT back on their purchases.

Gary Steele, VAT Policy Manager, said Customs have introduced changes following consultation with retailers, refund companies and customs officers on ways to counter misuse and fraud.

A review of the scheme discovered widespread evidence of students purchasing goods immediately prior to returning home, reclaiming the VAT back under the refund scheme, and then bringing the tax-free goods back into the UK within a short space of time.

>From 1 October 2004 foreign students and migrant workers from
countries outside the EC will only be permitted to use the scheme if they intend to remain outside the UK for a period of at least 12 months.

In addition retailers will be allowed reasonable time to review their procedures and paperwork, concerning how goods are described on the VAT refund forms and the timing of form completion.