HMRC launches review against airport stores who fail to pass on VAT savings

Airport stores who do not pass on VAT savings to customers will come under scrutiny as the government launches a review into the "simply unacceptable" practice.

The review comes four months after an undercover investigation launched by the Independent found that airport stores in the UK where collecting millions of pounds in VAT discounts on duty-free items without passing the savings onto the passengers.

Chancellor George Osborne assured that the VAT review would ensure that the savings at the airport duty free stores are passed onto the customer and not pocketed by the retailers. After treasury ministers banded together and called for an end to the practice, Osborne requested that HMRC launch an "extensive" review of airport sales, as some retailers are said to be keeping as much as 50p of every 1 pound of VAT savings.

"For families flying out of the UK for a winter-getaway, airports should be the ideal place to pick up a bargain," said Osborne in a statement. "VAT relief at airports is intended to cut prices for those travellers – not be a windfall gain for shops. But many people could be paying over the odds for their purchases because the government's VAT concession isn't passed on," he said.

"This is simply unacceptable. I have launched a review to make sure that this VAT relief benefits those it's intended for – consumers – whatever time of the year they are travelling," he added. The review is expected to be completed early 2016 and will also cover all other shopping taxes at airports. Travellers are legally required to present their boarding pass when purchasing alcohol or cigarettes from duty-free stores to prove they are travelling outside of the EU.

However, when buying any other items, such as cosmetics, clothing or even food, passengers are not required to show their boarding pass.

Photo: Flickr