Brexit impact: Heathrow loses legal submission following end of duty free shopping for tourists
Heathrow Airport has lost an attempt by the High Court to challenge the removal of duty free shopping for tourists.
Two programs providing for VAT-free purchases for some international visitors were withdrawn by the Treasury at the end of the Brexit transition period on January 1 of this year.
The Treasury and HMRC decision concerned the Retail VAT (RES) export regime and an extra-statutory concession (CES) on goods in duty-free and duty-free stores.
The CES allowed VAT-free sales of goods to passengers traveling outside the EU at airports, and the RES covered VAT refunds on sales of non-airport goods also to non-EU travelers, provided that certain conditions are met.
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Heathrow Airport, along with World Duty Free Group, which operates duty free shops at airports, and Global Blue Ltd, which operates duty free shopping on Main Street, have filed a lawsuit to challenge the ruling. .
In November, the High Court dismissed an allegation that the government had ignored the impact of the ruling on the travel industry, then described by Heathrow’s lawyer as a “hammer blow”.
At a hearing in February, the companies attempted to appeal the decision, as well as attempt to present other grounds for judicial review.
However, in a judgment delivered today, Lord Justice Green dismissed the case.
The judge, sitting with Justice Whipple, learned that a consultation had taken place in March 2020 about the decision, accepting evidence from the companies.
He said: “The Chancellor properly informed himself of the information needed to make the relevant decisions and carried out an appropriate balance of pros and cons.”
Lord Justice Green continued: “Looking back, my conclusion is that the decision-making process leading to abolition was characterized by the government seeking and obtaining relevant evidence and carrying out the appropriate balancing exercise.
“This process and the decisions that resulted from it were clearly within the government’s discretion and judgment.”
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The judge also concluded that the government was correct in concluding that the two regimes would have violated international trade rules after the transition period.
Lord Justice Green said: “In short, the continuation of the RES VAT was, as the government indicated in its written comments,” clearly discriminatory, as exports to the EU did not enjoy an advantage granted to exports. outside the EU “.”
“The court does not rule on the merits of the decision to abolish duty-free sales, which was essentially political for the government.
“The challenges relate only to questions of law and procedure,” the judge also said.
After the ruling, Global Blue UK Managing Director Derrick Hardman said: “We are disappointed with the court’s decision and have highlighted many errors in the decision-making process that undermine the rationale for this policy decision.
“This decision does not mean that the government’s new tax is correct. It simply confirms that the process used to reach this decision was within the guidelines of policy development. “
He added: “At Global Blue, we strongly disapprove of this move as we know it will profoundly harm the attractiveness of UK tourism and shopping.”
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