Airport VAT rip-off ‘that nets millions for top shops’

TOP British retailers were last night accused of making millions from tax discounts on duty-free sales at airports – without lowering prices for travellers.

They examine boarding passes to see if passengers are travelling outside the European Economic Area, which allows them to avoid paying 20 per cent VAT on goods.

But few retailers pass the savings on to customers, with the result that products sold at airports are often the same price as on the high street, it was reported.

Although not illegal, the practice has infuriated consumer rights experts and led to calls last night for retailers including Boots, Dixons and WHSmith to come clean with customers. Holidaymakers were also warned to be wary of goods sold under the guise of being ‘duty-free’ as shops are often the only ones who benefit from airport tax relief.

Consumer affairs expert Paul Lewis said retailers are ‘not being straight with the public’, adding: ‘They are asking to see boarding cards but not telling them that this is so they can make more money by not paying the VAT on what they’re selling.

‘What of course they should be doing is passing on the savings that they make to the passengers who are travelling outside Europe.’

Guy Anker, of the website Money Saving Expert, said: ‘There is an assumption that duty free means cheaper. But that is not the case. All

‘Not being straight with the public’

it means is that the stores themselves are not paying the duty.’

Boots emerged as one of the biggest offenders, according to analysis by The Independent.

For every £8 bottle of Nivea suncream sold at an airport shop to customers travelling outside the EU, it can reclaim £1.60 in tax. The high street price is also £8. A company spokesman said it uses boarding cards to ensure the ‘accurate reporting of VAT’. Dixons Travel insisted its airport prices are cheaper than those available online. WHSmith said that boarding passes are requested from customers, not demanded.

HMRC said stores need not pay VAT on goods sold to passengers leaving the European Economic Area – the EU member states plus Iceland, Norway, Switzerland and Lichstenstein. A spokesman said: ‘Duty free shops may treat the sale of goods to passengers [going to] non-EU destinations as zero-rated exports, provided they retain suitable evidence such as by scanning the boarding card.’