Previously, HMT estimated the cost of TFS, including its extension to EU visitors, to be £2.5 billion and therefore the government has been reluctant to restore the policy as long as it carries a perceived significant financial burden regardless of the strong call from industries.

We believe this costing is beyond inaccurate, primarily due to perceived overestimation by the Treasury regarding the deadweight cost of VAT on EU spending and the assumption of no additional visitors or spending if TFS is extended.

In the Autumn Statement, the Chancellor committed to reviewing the evidence and data submitted by the industry and businesses. Then the Office for Budget Responsibility (OBR) also decided to review the costing of the policy and would published it along with the Budget.

Despite expectations, there was no announcement regarding the result of the Treasury's review or restoration. In terms of the recosting review from the OBR, it has only reassessed the costing of ending tax-free shopping to the non-EU markets but has not examined its impact on the EU market, which would be a vital part of the restoration.

What industry is expecting is a full review of the costing of both reinstatement to non-EU visitors and extension to the EU, which has not been assessed by either the Government or the OBR.

The recent budget only acknowledges the OBR's review of the original costing without considering the EU market's importance. Efforts are underway to push for a joint study between HMT and industry representatives to provide a comprehensive assessment of TFS's impact.