Boost for airport shoppers as 'tax rip-off' review set for take-off

Chancellor George Osborne has tasked HM Revenue and Customs (HMRC) to investigate airport sales and retailers to make sure VAT savings are being passed on to shoppers, something Martin has been campaigning about for months.

What's the big issue?

Goods sold to someone travelling from the UK to outside the EU are exempt from VAT – the standard rate of which is 20%. But, back in August we reported on claims that some retailers were not passing savings on to shoppers, and instead were using the relief to boost their own coffers.

Boost for airport shoppers as 'tax rip-off' review set for take-off

Wasn't there an issue with showing boarding passes too?

The initial furore revolved around customers being required to show their boarding passes when making a purchase at airport retailers, so the shops could use the information to claim VAT relief.

But it is a requirement for duty-free shops to ask customers to show their boarding passes – causing confusion for some shoppers.

Martin therefore followed up the initial campaign with a blog post confirming that customers are required to show their boarding passes when purchasing goods in duty-free shops – just not in other airport retailers.

So what is the Government now planning?

Now, following pressure from Martin, MoneySavingExpert and other media outlets, the Government has confirmed it's launching a review to ensure VAT relief in airports leads to savings for shoppers, as it is intended to, and not shops.

According to the Treasury, currently some airside retailers keep up to an estimated 50p of every £1 of potential VAT savings instead of passing them on to customers.

Martin Lewis, founder of MoneySavingExpert.com, says: "It’s good to see the Government catching up on what the rest of us have been yelling about for ages.

"Quite simply, one of two things must happen: either, if you present your boarding pass you must get a discount (if you’re going outside the EU) that equates to exactly the reduction in VAT for the retailers. The retailers, of course, argue it is too difficult for them to do, but I think that is simply baloney.

"The fact that millions of companies process discount codes every year means the technology is there to read a boarding pass destination and give a fixed discount off the back of it. Of course, it would be reasonable for them to make a small admin charge to cover their costs.

"Or, if a retailer says it can’t do that, then it must give the VAT relief in full but spread across all customers through a general reduction of prices. However, the first solution is obviously far preferred."

He adds: "Yet, these types of reviews take time to come into effect so my message to people travelling to the airports is quite simple: do as Zammo. If they ask you for your boarding pass, Just Say No. The only exception to that is at duty free where they do have to ask you for your boarding pass, not because of VAT issues but because of duty-free issues.

"But for the rest, remember Zammo’s mantra: Just Say No."

The review is expected to be completed in early 2016.