This article was written in partnership with Airvat

Attract more international customers to your stores with a next generation VAT refund service

Current challenges

A new era of shopping is upon us. In the face of Covid-19, shops have had to find creative ways to keep retail therapy safe for the customers and staff. As tourism recovers in the coming months retailers will need to give more thought to tax-free shopping, officially known as HMRC’s Retail Export Scheme.

Currently, in-store VAT refunds can be a lengthy process, requiring customer eligibility checks, printing of VAT407 tax refund forms and other admin. This ties up staff resources and creates queues at the till.

For these reasons, 9 out of 10 small or medium-sized merchants don't bother navigating the VAT refund scheme. Whilst most larger retailers already provide tax-free shopping, they often fail to do this effectively. This can either be because they haven’t installed special EPoS terminals to print tax refund receipts on each till or simply they have not dedicated enough staff. As a result, around 80% of VAT is simply left unclaimed by tourists.

Brexit opportunity

From January 2021, as Britain exits the Customs Union, it is expected that EU tourists will be eligible for VAT refund. This opens a huge opportunity, tripling total customers to 39 million per year with a total spending of over £8 billion on the UK High Street.

Just imagine being able to offer a “discount” equal to the 20% VAT rate to your international customers without having to reduce your prices. Now is the perfect opportunity to introduce digital tax-free shopping in your store to capture additional tourist footfall.

“Making tax digital”

HMRC recognises the issues facing the current scheme and has been trying for years to catch up with France, Italy, and Spain who already offer a digital system. Earlier this year, the government carried out a consultation to better inform its strategy of modernising tax-free shopping in line with its “make tax digital” efforts. In the meantime, private companies, such as Airvat, have been innovating to streamline the scheme and offer digital VAT refunds solutions for retailers. 

How does digital tax-free shopping work

Retailers can already effortlessly start offering the digital VAT refunds to tourists without any initial integration or extra effort from staff. It is as simple as displaying the Airvat sticker on the till in your store, to prompt the tourists to download the tax refund app.  Technology has automated the refund procedure, eliminating any admin burden on store staff. Your customers will also love the convenience of tax-free shopping from their mobile phone.

Learn more here about offering digital tax-free shopping.