Heathrow Airport has launched a legal fight against a decision to end duty-free shopping on most goods.
The Treasury plans to end VAT rebates for passengers, which would stop bargains on clothing, chocolate, electronics and perfume in airports.
From January 1, tax savings on goods will only apply to booze and tobacco.
It will affect business travellers and outbound holidaymakers.
But bosses at Heathrow, Britain’s biggest airport, claim the change will cost billions.
They say it will put thousands of jobs at risk at time when the aviation industry is already experiencing a crisis due to the coronavirus pandemic.
A recent report by the York Aviation consultancy firm warned the decision to cancel duty-free shopping could cost the country £2.1billion.
Heathrow has now launched a judicial review of the decision and have written to Chancellor Rishi Sunak, the Daily Mail reported.
Heathrow chief John Holland-Kaye said: “Overnight, what draws many to our shores and has taken decades to build will be lost.”
The heads of World Duty Free and tax refund firm Global Blue also signed the letter.
It warned the move by the Treasury will cause “untold damage” to UK competitiveness after Brexit.
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They also claim up to 70,000 jobs will be under threat by it.
The Treasury previously said the decision was made after concerns the “saving wasn't always passed on to consumers”.
It claimed in some instances tax-free goods are brought back into the country by Brits, which put the high street "at a disadvantage".
The decision to get rid of the VAT rebate scheme could cost a massive £2billion in lost tax revenue for the Government, according to reports.
Retailers are also opposing the decision including the heads of Boots, WHSmith and Dixons.
They have estimated it could lead to £10billion less being spent in shops.
Sky News reported that a pre-action notice was filed last week.
The Treasury has been contacted for comment.
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