(Alliance News) - Heathrow Airport has lost a High Court bid to challenge the scrapping of tax-free shopping for tourists.
Two schemes providing VAT-free shopping for some international visitors were withdrawn by the Treasury at the end of the Brexit transition period on January 1, 2021.
The Treasury and HMRC's decision related to the VAT Retail Export Scheme (RES) and an Extra Statutory Concession on goods at duty-free and tax-free shops.
The ESC allowed VAT-free sales of goods to passengers travelling outside the EU at airports, and the RES covered VAT refunds on non-airport sales of goods also to non-EU travellers, subject to certain conditions being met.
Heathrow Airport, along with World Duty Free Group, which operates duty-free shops in airports, and Global Blue Ltd, which operates tax-free shopping provision on the high street, brought legal action to challenge the decision.
In November, the High Court dismissed a claim that the government had failed to consider the impact of the decision on the travel sector, then described by Heathrow's barrister as a "hammer blow".
At a hearing in February, the businesses attempted to appeal against the decision, as well as try to bring other grounds for a judicial review.
However, in a judgment on Friday, Justice Green dismissed the case.
The judge, sitting with Justice Whipple, heard a consultation had taken place in March 2020 about the decision, accepting evidence from the companies.
He ruled: "The chancellor properly informed himself as to the information needed to take the relevant decisions and conducted a proper balancing exercise of pros and cons."
Justice Green continued: "Standing back, my conclusion is that the decision-making process leading up to abolition was characterised by the government seeking and obtaining relevant evidence and conducting a proper balancing exercise.
"This process and the resultant decisions were squarely within the government's margin of judgment and discretion."
The judge also found the government was right to conclude that both schemes would have breached international trade rules after the transition period.
Justice Green said: "In short, maintaining the VAT RES was, as the Government set out in its written submissions, 'clearly discriminatory, with exports to the EU not benefiting from an advantage granted to exports outside the EU'."
"The court expresses no view on the merits of the decision to abolish tax-free sales, which was essentially a political one for the government to take.
"The challenges concern issues of law and procedure only," the judge also said.
Burberry Group PLC in January warned the UK will lose its attractiveness as a luxury shopping destination as a result.
"The VAT retail export scheme previously allowing VAT refunds for non-EU tourists has now been stopped. This development, which will reduce the attractiveness of the UK as a destination for luxury shopping, will have limited impact on revenue in the current year given the low levels of tourist traffic, but is expected to have a more significant impact when travel flows resume with sales likely to shift between countries. We are looking at ways to mitigate any impact this has as tourists return to mainland Europe," Burberry commented at the time.
source: PA
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