Britain ‘shooting itself in the foot’ with tourist tax, says Battersea Power Station chief

Axing VAT-free shopping for overseas visitors is harming London, says Simon Murphy

Simon Murphy
Simon Murphy is the latest senior business figure urging Rishi Sunak to scrap tourist tax Credit: Heathcliff O'Malley

Britain is “shooting itself in the foot” by not axing the tourist tax, the chief executive of Battersea Power Station has said.

Simon Murphy said the decision to axe VAT-free shopping for overseas visitors in 2021 had harmed London and made it less competitive compared to rival European cities.

Mr Murphy said: “The UK cannot be complacent about our international appeal in this increasingly competitive world and we do risk shooting ourselves in the foot by not acting.”

The property chief is the latest senior business figure to urge Rishi Sunak to scrap the policy, which was introduced while he was chancellor.

Harrods chief Michael Ward said last month the retailer had been forced to replace luxury handbags with cheaper items at its airport shops as a result of the tourist tax. The chief executives of Burberry, Mulberry and Harvey Nichols have also all complained about the policy’s impact on sales.

Grade-II listed Battersea Power Station was reopened last October after Malaysian investors spent billions redeveloping the area into flats and a new shopping destination. Retailers with shops there include Apple, Chanel and luxury watch brand Breitling.

Mr Murphy, who runs the Battersea Power Station Development Company, said reintroducing tax free shopping for tourists would encourage more people to visit Britain and “benefit not only retail, but the wealth of businesses that rely on the tourism trade”.

Tax-free shopping still applies in EU countries and spending by US and Middle Eastern tourists has surged in France and Italy, while barely reaching pre-pandemic levels in the UK.

Britain is expected to miss out on more than £3bn of tourist spending this year as a result of tourist tax, according to tax free shopping company Global Blue.

A Treasury spokesman said: “VAT-free shopping does not directly benefit Brits – it lets foreign tourists who buy items in the UK to claim back VAT as they return home.

“The scheme could cost British taxpayers around £2bn a year at a time when we’ve already had to take difficult decisions to get debt falling and fewer than one in ten non-EU visitors used the previous scheme, showing it’s not a significant attraction for tourists.”