Airport shops such as WH Smith have been urged to pass on VAT savings they can claim from passengers’ duty free purchases.
The Independent uncovered that major airport retailers – such as WH Smith, Dixons and Boots - pocket millions of pounds by saving 20% VAT on purchases made by customers travelling outside the European Union.
Customers are regularly asked for their boarding cards to be scanned in order for the VAT savings to be claimed, but it is not a legal requirement, contrary to popular opinion.
Now Treasury minister David Gauke has said VAT relief at airports was intended to reduce prices for travellers and urged retailers to pass on the savings.
Gauke said: “The VAT relief at airports is intended to reduce prices for travellers, not as a windfall gain for shops.
“While many retailers do pass this saving on to customers, it is disappointing that some are choosing not to. We urge all airside retailers to use this relief for the benefit of their customers.”
Many customers are now refusing to hand over boarding cards at airports in a “grassroots rebellion”, according to the Independent. Several have taken to social media to complain about their boarding card being demanded before they make a purchase. “I got told I couldn't make a purchase unless I showed my pass on the way to Egypt a month ago,” said one. "That is cheeky."
In a statement, a WH Smith spokesperson said: “WH Smith policy states that boarding passes should be requested from customers, and not demanded, such that there is no obligation on the part of the customer.
“Whilst much of what we sell, e.g. newspapers, magazines and books, is fixed price and does not attract VAT, any VAT relief associated with the identification of customers travelling outside of the EU is reported in accordance with UK legislation, and any relief obtained is reflected in our single price and extensive promotional offers provided to all of our customers.”
The company added that “operational and financial system constraints” make dual pricing of products for customers inside and outside od the EU a “practical impossibility.”
The destination data, regardless of whether it is to the UK, EU or beyond, allows WH Smith to analyse the purchasing trends by time of day and by product category for customers travelling to different locations, WH Smith said, which assists it in product ranging and placement decisions at its airport stores.
A spokesman for Boots said the company did claim back some VAT for non-EU passengers but added that this was in accordance with the rules set out by the government.