Airport retailers are using information on boarding cards to claim back millions in VAT - and are rarely passing the savings on to passengers
Airport retailers have been accused of misleading travellers by claiming millions in VAT refunds without passing on the savings to passengers.
The vast majority of airport shops in the UK request that passengers hand over their boarding passes to be scanned at the checkout – a practice that few realise is used to help stores claim back VAT of 20 per cent on goods sold to passengers flying outside the EU.
And research by the Independent has revealed that – while retailers suggest goods are tax free – these savings are often not passed on to customers.
It found that Boots, one of the worst offenders, charges the same for all products sold in airports as it does on the high street. A bottle of Nivea Sun Spray, for example, costs £8, meaning Boots can reclaim £1.33 from HMRC if it is sold to a passenger travelling outside the EU. But rather than cutting the cost of the product, it is simply pocketing the difference.
Other retailers were found to be offering small reductions in their airport outlets, but still keeping the lion’s share of the savings. Dixons charges £619 for an iPhone 6 on the high street. In airport stores, it’s slightly cheaper, at £593.99 – but that’s nowhere near the £103.17 saving Dixons makes on every iPhone 6 sold to non-EU passengers. One item on sale at World Duty Free (Clarins Double Serum, 30ml) was priced at £45.80, despite being available for less on the high street, and despite the retailer saving £7.63 in VAT to many fliers.
“Handing over your boarding pass at the airport shop, even if you're buying nothing more than a copy of The Telegraph, has become practically second nature – but I bet very few people realised why retailers can be so insistent,” said Nick Trend, Telegraph Travel’s Consumer Editor.
“And no wonder – the biggest retailers must save millions in VAT each year. But surely it’s those passengers flying outside the EU that ought to be making the savings?”
He added that there is a "general lack of transparency" when it comes to airport prices. “I’d like to see a clear breakdown of exactly how much you are saving on duty-free goods, rather than just a final price,” he said.
A spokeswoman for Boots confirmed that its airport staff are requested to scan boarding passes to ensure an “accurate reporting of VAT”, but said it was not compulsory.
“The HMRC and airports accept that this is general practice for all retailers located within airport terminals,” she told The Independent.
A spokesman for HMRC confirmed that passengers are not legally obliged to hand over their boarding pass.
Dixons said it follows the "standard practice of non-duty free airport retailers in offering one single, great value price across products".
It added: “We are not duty free; instead, we offer customers a simple, single price and give them our price promise to beat key online competitors.”
WHSmith claimed that dual pricing – showing discounts for non-EU passengers – was a “practical impossibility”.
“WHSmith policy states that boarding passes should be requested from customers, and not demanded,” said a spokeswoman. “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.”
But some stores have clearly found a way. Harrods sells all its products VAT-free in its Heathrow stores.
Editor's note: The VAT calculations used in this story were originally incorrect. They have now been amended.
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