WH Smith Travel will now pass on tax savings to non-EU bound customers shopping in its airport branches. The "new approach" follows an investigation that revealed it had been pocketing millions of VAT paid on duty free purchases.
The Independent uncovered in August of last year that WH Smith was one of several retailers, also including Dixons and Boots, which were keeping the 20% in VAT added to purchases which customers travelling outside the EU do need not pay to HMRC.
The newspaper said customers' boarding cards were scanned, but only "to allow the retailer to calculate how much they could legally withhold", rather than to calculate concessions.
Treasury minister David Gauke said at the time it was "disappointing" some shops were not passing on VAT relief in airports to customers, adding it was "intended to reduce prices for travellers, not as a windfall gain for shops". The then-Chancellor, George Osborne had also demanded action on the practice.
While WH Smith previously said “operational and financial system constraints” had made a dual pricing model for customers inside and outside of the EU a “practical impossibility", airport branches of WH Smith will now be passing on VAT savings to customers.
A minimum threshold to qualify for savings on purchases has been set at £6, and all eligible customers must agree to have their boarding cards scanned.
A spokesperson said: “Following customer research, focus groups and an in-store trial, WH Smith has introduced a new approach to the VAT relief concession at UK airports in time for the peak summer season.”
WH Smith is meanwhile set to open its first stores in Spain, according to DFNI online, with two travel outlets planned for Alicante Airport.
WH Smith International director Louis de Bourgoing called the five-year deal "a significant step in our European development strategy", following on from the win of an airport contract in Dusseldorf and further openings in northern Europe.
"The team has worked hard to deliver a high standard of design for these stores and provide a real step-change to the traditional ‘news and books’ operations. We look forward to working with AENA to deliver a compelling offer to Alicante airport’s passengers,” he said.