'As a tourist to the UK, can I still claim a VAT refund on goods purchased when I leave?'

The VAT Retail Export Scheme was cancelled on January 1, when the UK officially left the EU

Heathrow Airport's duty free shopping arcade. Tourists can no longer apply for a VAT refund on goods purchased when they leave the country. Getty

I used to travel to the UK every few months for business and if I bought larger items when there, I was able to claim VAT. I have not travelled for some time due to the coronavirus pandemic but I have heard some mixed information about whether I will be able to do this at the airport on my way back after my coming trip. Please advise. AW, Abu Dhabi

It used to be the case that international travellers could reclaim VAT paid on many newly purchased items when leaving the UK.

As the rate of VAT in the UK is 20 per cent on most goods, this could be a significant sum. This situation has now changed and this option was cancelled with effect from January 1, 2021, a date when many changes took place as it was the first day that the UK was fully out of the EU after a transition period.

After a consultation on duty-free and tax-free goods carried by passengers, the Treasury announced that the VAT Retail Export Scheme will not be extended to EU visitors after Brexit, and will also be withdrawn for non-EU visitors in Britain.

While visitors to the UK won’t be able to reclaim VAT on items they purchase and take home with them, any non-EU visitors who purchase items in store and have them sent directly to an overseas address will be able to reclaim VAT in line with international tax principles.

This concession should also apply to online purchases, providing a retailer is set up to handle the process.

We were persuaded by a close family friend to invest in her company using our credit cards. Even before the pandemic, the company was not generating any money, so we let her use our credit cards and she maxed out all of them. Banks are now chasing us for payment.

This has been a burden on us for years now as we are trying to pay off the debt that she put us into. Is there any other way out of this? I am still hoping there is something we could do to stop it being a serious problem as I have been without a job for five months and only my wife is working. DC, Dubai

When someone takes out a credit card, it is for their own use and they are not permitted to give the cards to a third party, including their spouse.

It is contrary to the legal terms and conditions of any card to hand it over to someone else for their use and the signing of this paperwork when applying for a card is taken as agreement to the specified terms.

While the precise wording will vary between the providers of credit cards, they will all include a phrase along the lines of “the usage of the card is restricted to the cardholder and for their personal use”. It will also state something similar to “the cardholder shall not allow any third party to use the card for any purpose”.

The cardholder is solely responsible for all repayments, no matter if he or she has permitted someone else to use the cards

Keren Bobker

This means that DC and his wife have broken the terms of the agreement with the bank and if they find out, it is within their rights to cancel the card and demand immediate repayment of the outstanding balance.

The cardholder is solely responsible for all repayments, no matter if he or she has permitted someone else to use the cards.

It is my understanding that there is no written agreement in place between DC and the friend regarding money borrowed, so he will be unable to pursue a civil case against her. Clearly, DC needs to ask this woman to repay what she owes but he will be unable to force her.

If payments are not maintained on the credit cards, the banks will take action and once a person has missed three payments, they will usually register a police case and possibly apply for a travel ban, too. If there is no way of paying what is owed, DC may want to consider applying for insolvency if he qualifies.

To apply for insolvency, a person needs to owe Dh250,000 or more and be at least 65 days behind on repayments. If this is an option, it stops any further action but has consequences and money still needs to be repaid, often by liquidating other assets and possessions.

The first step should be to contact the banks to whom money is owed and to try to restructure the debts to reduce the repayments. It is always best to contact the banks before they start any action as this shows a willingness to repay money, which should assist with negotiations.

Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with more than 25 years’ experience. Contact her at [e-mail]. Follow her on Twitter at @FinancialUAE

The advice provided in our columns does not constitute legal advice and is provided for information only