Major airport retailers including Dixons Travel, WHSmith, and Boots could be affected by a government review into airport retail taxes following consumer outrage over the revelation that retailers ask for boarding cards be shown at point of purchase to avoid paying tax, rather than for security reasons.
In order to avoid paying VAT, retailers must scan a passengers boarding card however the majority have decided not to pass the saving on to customers. Research by HMRC indicated that some stores will pocket as much as 50p in every £1 of their VAT discounts.
George Osborne said the practice was unacceptable: “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. This is simply unacceptable. I have launched a review to make sure that this VAT relief benefits those it’s intended for – consumers.”
Since the report in the Independent earlier this year, many travellers have refused to hand over their boarding cards after realising it is a voluntary, not mandatory, requirement when buying from an airport retailer.
Boots, Dixons, and WHSmith all indicated to The Drum at the time that they would not change their policies on airport VAT, maintaining that they merely “request” passenger boarding card information – rather than demand it – and price structures will remain the same.
The outcome of the review is expected in early 2016.