Risk & Economy » Tax » Airport retailers censured for failing to pass on VAT savings

RETAILERS at the UK’s airports have been criticised after it emerged they are failing to pass on VAT savings to customers when they show their boarding passes at the tills, the Independent reports.

Passengers are asked to show their boarding cards at tax-free shops in UK airports so retailers can avoid paying 20% VAT on purchases made by those flying outside the EU.

Financial secretary to the Treasury David Gauke insisted VAT relief at airport shops was intended to lower the prices of goods for travellers, adding it was not intended to provide an opportunity for a bonanza to retailers.

Passengers have no legal obligation to show their boarding pass when buying goods at the airport.

Reports suggest retailers have been giving various reasons for asking customers to present their boarding passes, including security – a claim that has been dismissed as “complete tosh”.

In many cases, staff at the shops have simply been told to ask customers to show their passes, which has led to people being asked for their passes when buying books, magazines or newspapers which are zero-rated for VAT.

WHSmith – one of the many retailers running branches in Britain’s airports – said “operational and financial system constraints” make “any form of dual pricing” for its product file a “practical impossibility”.

“The destination data, regardless of whether it is to the UK, EU or beyond allows WHSmith to analyse the purchasing trends by time of day and by product category for customers travelling to different locations, and assists us in product ranging and placement decisions at our airport stores,” it said in a statement.

It added that boarding passes should be requested from customers, and not demanded, such that there is no obligation on the part of the customer.