Ministers say airport retailers must pass on VAT savings

/ 12 August 2015

David Whiscombe

‘David Gauke, the Chief Secretary to the Treasury, has called on airport retailers to cut their prices, after it emerged that they are claiming millions in VAT discounts on duty free items by making passengers show their boarding passes at the checkout. Although many passengers assume that the demand is a legal requirement, the information is actually used by stores to avoid paying 20% VAT on everything they sell to customers travelling outside the EU.

Mr Gauke said that the VAT relief was put in place to “reduce prices for passengers” rather than as a “windfall gain for shops”. Steve Baker, a Conservative member of the Treasury select committee, added that passengers are being “ripped off” and suggested that the committee should investigate.

The revelation has prompted a consumer backlash, with growing numbers of travellers saying they will refuse to show their passes in future. Oliver Wright in the Independent notes that concessions in Heathrow pay an average of £1m each a year in rent, adding that the VAT matter may be deemed a “victimless” sleight of hand that helps stores make profit despite sky-high rents.

Source: Daily Mail, The Independent, The Daily Telegraph

William Henry Smith’s bookstalls at railway stations are one thing. Turning airports (and railway stations come to that) into shopping centres is quite another. They might as well go the whole hog and open London’s next airport in the car park at Brent Cross.

But on the matter of VAT, what does it matter? The only things that a sensible traveller (meaning the writer) really wants to buy between check-in and the departure lounge are either reading matter (always zero-rated) or a cup of tea and a sticky bun (standard-rated regardless of my destination).

David Whiscombe


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