Treasury ministers have spoke out against the airport retailers who collect millions of pounds in VAT discount on duty-free items sold to customers travelling outside the European Union without passing the savings onto customers.
For years it has been the norm that travelling customers in the UK present their boarding cards when making a purchase within an airport, but an investigation conducted by the Independent revealed that the information on the boarding cards is used by the retailers to avoid paying 20 percent VAT on items sold to customers travelling outside of the European Union. Rather than passing these savings onto the customers, some of the UK's largest retailers including the likes of Dixons, WHSmith and Boots, use the tax relief to increase the profit of their airport units.
Airport retailers urged to cut prices in VAT scam
Since news emerged of the VAT scam, the Financial Secretary to the Treasury, David Gauke has stepped forward and spoken out against the practice. "The VAT relief at airports is intended to reduce prices for travellers not as a windfall gain for shops," he said to the Independent. 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." Steve Baker, a Conservative member of the Treasury select committee, added that passengers are being "ripped off", and would like his committee to investigate.
Across the UK, thousands of consumers have spoken out against the practice on social media channels, with some vowing to refuse showing their boarding cards at airport stores to stop retailers from profiting and others questioning how difficult it would be to introduce a dual pricing system for customers travelling outside of the EU. Although some airport retailers have issued new guidelines saying it is within travellers rights to not share their boarding card information, others including Reiss, Thomas Pink, Louis Vuitton and Gucci insisted that it was necessary to complete the transaction.
Martin Lewis, the Money Saving Expert founder has called on all travellers to stand together and refuse to let airport retailer scan boarding passes. During an interview on BBC Radio 2 with Jeremy Vine, he said: "What we need to do, if we want to get them to change their policy, is quite simple: those of you who are going away this summer outside the EU, when they ask for your boarding pass, say, ‘No, sorry, I’m not going to give it to you: it only gives you a reduction. Unless you pass that on to me I'm not going to give it to you. Please tell your bosses.'"
He added that travellers should ignore any claims made by airport retail staff that showing a boarding pass during checkout is obligatory. "You're not protecting the sanctity of Britain by giving them your boarding pass – you’re enabling the commercial company to get a reduction on its tax bill."