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Airport retailers failing to pass VAT savings directly to customers despite investigation Airport retailers failing to pass VAT savings directly to customers despite investigation
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Airport retailers are still not passing on the tax they have been charging on tax-free sales directly to customers, almost a year after an Independent investigation into the practice.Airport retailers are still not passing on the tax they have been charging on tax-free sales directly to customers, almost a year after an Independent investigation into the practice.
In August 2015, retailers including WHSmith, Dixons Travel, Boots and World Duty Free were exposed for making customers hand over their boarding passes as a “security measure” when making purchases.In August 2015, retailers including WHSmith, Dixons Travel, Boots and World Duty Free were exposed for making customers hand over their boarding passes as a “security measure” when making purchases.
These retailers instead used the information to keep the VAT owed to customers flying outside the EU. For a £6 bottle of suncream, that’s £1 going into the pockets of the retailer rather than to the customer.These retailers instead used the information to keep the VAT owed to customers flying outside the EU. For a £6 bottle of suncream, that’s £1 going into the pockets of the retailer rather than to the customer.
Almost a year since the investigation, WHSmith has said all passengers travelling outside Europe will get a discount, but only for items costing £6 or more.Almost a year since the investigation, WHSmith has said all passengers travelling outside Europe will get a discount, but only for items costing £6 or more.
Other retailers have since made clear that handing over boarding passes is optional.Other retailers have since made clear that handing over boarding passes is optional.
John Lewis has followed WHSmith’s lead. It said it would always pass on savings. “Pricing at John Lewis Heathrow is the equivalent of our standard High Street price less the value of VAT.  This discounted price is available to all customers, regardless of destination,” a spokesperson said. John Lewis has followed WHSmith’s lead. It said it would always pass on savings. “Pricing at John Lewis Heathrow is the equivalent of our standard high street price less the value of VAT.  This discounted price is available to all customers, regardless of destination,” a spokesperson said.
But some have yet to offer the clarity of a taxable and a tax-free price.But some have yet to offer the clarity of a taxable and a tax-free price.
A spokesperson for Dixons travel told The Independent that unlike WHSmith, it does not pass on the discount to individual customers.A spokesperson for Dixons travel told The Independent that unlike WHSmith, it does not pass on the discount to individual customers.
Instead the benefit is used to support its promise to match internet prices or give twice the difference back. Dixons only price-matches with Argos, John Lewis, and Amazon, excluding third party sellers. Shoppers can obtain cheaper prices on certain items elsewhere online. For example the Canon EOS 1300D camera is available online for £325 compared to a Dixons Travel price of £345.Instead the benefit is used to support its promise to match internet prices or give twice the difference back. Dixons only price-matches with Argos, John Lewis, and Amazon, excluding third party sellers. Shoppers can obtain cheaper prices on certain items elsewhere online. For example the Canon EOS 1300D camera is available online for £325 compared to a Dixons Travel price of £345.
In December, former chancellor George Osborne said, "VAT relief at airports is intended to cut prices for those travellers - not be a windfall gain for shops."  The Treasury estimated that some retailers were keeping 50p in every £1 of VAT, which Osborne described as "simply unacceptable," and announced an "extensive" HMRC review which was due to report in spring 2016. In December, th former chancellor, George Osborne, said, “VAT relief at airports is intended to cut prices for those travellers – not be a windfall gain for shops.”  The Treasury estimated that some retailers were keeping 50p in every £1 of VAT, which Mr Osborne described as “simply unacceptable”, and announced an “extensive” HMRC review which was due to report this spring.
Retailers however, now report that they are conducting their own review instead. Heidi Woodhouse, managing director of Dixons airport shops stated: “Dixons Travel are part of the UK Travel Retail Forum and have been involved in the review of the policy in conjunction with other retailers.” Retailers, however, now report that they are conducting their own review instead. Heidi Woodhouse, managing director of Dixons airport shops stated: “Dixons Travel are part of the UK Travel Retail Forum and have been involved in the review of the policy in conjunction with other retailers.”
A spokesperson for World Duty Free, also a member of UKTRF, said that it does not offer dual prices with and without tax. Instead, the company, “always ensured that all VAT savings are passed onto customers and will continue to do so.”A spokesperson for World Duty Free, also a member of UKTRF, said that it does not offer dual prices with and without tax. Instead, the company, “always ensured that all VAT savings are passed onto customers and will continue to do so.”
UKTRF is a group of airport retailers, drinks companies, tobacco manufacturers and airport executives which lobbies government on behalf of its interests. It has previously persuaded the Department of Health to grant an exemption to airports from tobacco advertising restrictions.UKTRF is a group of airport retailers, drinks companies, tobacco manufacturers and airport executives which lobbies government on behalf of its interests. It has previously persuaded the Department of Health to grant an exemption to airports from tobacco advertising restrictions.
The group has been working on its code of practice around VAT since the Independent’s revelations last year. A spokesperson said that work on the code is still ongoing but that it aims to publish it by September or October. UKTRF’s spokesperson said its members’ compliance departments were still considering the guidelines.The group has been working on its code of practice around VAT since the Independent’s revelations last year. A spokesperson said that work on the code is still ongoing but that it aims to publish it by September or October. UKTRF’s spokesperson said its members’ compliance departments were still considering the guidelines.
It means the code, which will be voluntary, will not be in force during the busiest months of the year when millions will fly from UK airports on summer holidays. It means the code, which will be voluntary, will not be in force during the busiest months of the year when millions will fly from UK airports on summer holidays. 
The contents of the code are not yet known but a spokesperson for UKTRF said that the WHSmith commitment to pass on savings would be “indicative” of the new approach.The contents of the code are not yet known but a spokesperson for UKTRF said that the WHSmith commitment to pass on savings would be “indicative” of the new approach.
“This is all about transparency. We want to put in very plain terms how the VAT concession is being used,” the spokesperson said. “This is all about transparency. We want to put in very plain terms how the VAT concession is being used,” the spokesperson said. 
Boots, another UKTRF member, did not respond to our requests for comment.Boots, another UKTRF member, did not respond to our requests for comment.