AIRPORT shops are being urged by the UK government to cut prices to pass on VAT savings from passengers flying outside Europe.
Treasury minister David Gauke said any savings were supposed to benefit customers, not used as a way to boost profits.
The VAT relief at airports is intended to reduce prices for travellers, not as a windfall gain for shops.Treasury minister David Gauke
The call followed claims retailers were asking to see boarding cards so they could recoup the VAT on items sold to people on flights leaving the European Union. The practice means shops in airport terminals do not pay 20 per cent VAT on goods they sell to such customers.
The practice has provoked anger from some passengers, who refused to hand over boarding cards when making purchases. Stand-up comedian Philip Simon, who flew from Heathrow to Edinburgh yesterday, tweeted: “When I shop in #DutyFree, I won’t be showing my boarding pass!”
Mr 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.”
However, retailers denied they were pocketing VAT savings. World Duty Free, which has shops at Edinburgh and Glasgow airports, said the government required passengers to show passes at its stores.
Its spokeswoman said: “Unlike other airport stores, goods sold in duty-free stores are brought on to the airport ‘duty and tax suspended’, which means the duty-free retailer accounts for the taxes when the product is sold to the customer.
“World Duty Free uses the flight destination information on the boarding pass to ensure any applicable customs, excise duty and/or VAT is fully accounted for to HM Revenue & Customs [HMRC]. This process does not allow World Duty Free to reclaim any tax from HMRC.
“On the contrary, it is the system agreed with HMRC [that] enables World Duty Free to make the correct payment to HMRC where applicable.”
WHSmith, which has multiple branches at Scottish airports, said its staff should request - not demand - boarding passes from customers, as they were not obliged to show them.
Its spokeswoman said: “Whilst much of what we sell, such as 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.
“Any relief obtained is reflected in our single price and extensive promotional offers provided to all of our customers.
“Operational and financial system constraints make any form of ‘dual pricing’ for our extensive 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.”
One in four of Glasgow Airport’s passengers are on flights to outside Europe, and just over one in ten of Edinburgh’s.
A spokesman for Glasgow Airport said: “Whilst this is a matter for travel retailers, we work closely with our retail partners to benchmark prices to ensure they are competitive.
“All passengers, including the 75 per cent who are flying to domestic and EU destinations, can benefit from substantial savings when shopping at the airport, whether they are buying fragrance, whisky, sunglasses, fashion and accessories.
“Retailers will generally indicate the level of savings by including both the high street and airport price on labels.”
An Edinburgh Airport spokesman said: “It is right our business partners [retailers] are responding to the questions being asked.
“This is, of course, a matter for them.”