Tighter rules on tax free shopping
Retailers responsible for customer compliance
New guidance issued by Customs on tax free shopping requires UK retail outlets to take more responsibility for customer compliance.
Visitors to the UK from outside the European Community can claim back VAT on goods they have purchased whilst in the UK.
The updated requirements stress the need for retailers to provide adequate descriptions of goods purchased on the VAT refund form – or risk rejection of the refund form by UK Customs officers.
Students and migrants are recognised as commonly abusing the refund scheme by purchasing goods prior to leaving the country, claiming the VAT refund, and then bringing the tax-free goods back into the UK within a short space of time.
Customs hopes to combat this with a new requirement permitting this group to only buy goods under the scheme when they intend to remain outside the EC for at least 12 months.
John Kennedy, indirect tax partner at Deloitte, said: “Retailers now need to operate adequate checks on customers wishing to use the scheme to ensure all aspects of the new guidance are complied with. This will include checking passports and visas.
“Retailers should review their current arrangements and inform staff of the new requirements, before they come into force on October 1.
“The financial penalties for failing to comply will leave the retailer stuck with the VAT due, together with interest. In exceptional circumstances penalties could also apply. Retailers who have not followed the existing rules fully may find the new requirements painful.”
