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VAT row: Treasury urges airport shops to cut prices for travellers Airport shops face revolt of customers refusing to show boarding passes
(about 2 hours later)
Retailers have been urged by the Treasury to cut their prices at airports to reflect VAT discounts they receive for travellers leaving Europe amid claims that some stores are using the relief to boost their profits. Shops at airports are facing a consumer revolt over claims that retailers are asking customers to show boarding cards to avoid paying VAT without passing discounts on to customers.
The Treasury minister David Gauke stressed that the savings shops make through VAT discounts at airports are supposed to be passed on to customers, not used as a way to boost profits. Customers of prominent stores including WH Smith, Boots and Dixons on social media have pledged not to show their boarding passes at airports and urged their followers to do the same.
Related: The Boarding Pass Revolt: why passengers are taking a stand They have also been demanding answers from the stores about whether they are passing on to customers the VAT savings they make at airports.
He spoke after the Independent revealed that many airport stores are asking passengers to present their boarding cards when making a purchase. There is growing concern that information on boarding cards is being used to claim VAT relief on sales to travellers leaving the EU.
The information on the cards is then used to claim VAT relief on sales to travellers leaving the EU. Retailers do not have to pay 20% VAT on goods sold to customers travelling outside the EU.
The practice means that retailers do not pay 20% VAT on goods sold to customers travelling outside the EU. The newspaper claimed stores such as Boots and WH Smith did not pass on the savings to customers. The revolt comes after Treasury minister David Gauke said some retailers were not passing on savings to customers.
The revelation led to intervention from the Treasury, with Gauke insisting retailers should use VAT relief to benefit customers. He told the Independent: “The VAT relief at airports is intended to reduce prices for travellers, not as a windfall gain for shops. Speaking to the Independent he said: “The VAT relief at airports is intended to reduce prices for travellers, not as a windfall gain for shops.
“While many retailers do pass this saving on to customers, it is disappointing that some are choosing not to. We urge all airside retailers to use this relief for the benefit of their customers.”“While many retailers do pass this saving on to customers, it is disappointing that some are choosing not to. We urge all airside retailers to use this relief for the benefit of their customers.”
Many Britons leaving the country for summer holidays may be susceptible to the practice. A spokeswoman for Boots conceded that customers were asked to show boarding cards at airports. She said: “It is not compulsory to ask for them [boarding cards] so if someone doesn’t want to show it we won’t force it.”
It is not a legal requirement for passengers to show their boarding cards when buying supposedly duty free goods and many are now reportedly refusing to show them. In a statement the company said information on boarding cards was used to ensure accurate accounting. It said: “Our airport store teams are asked to request and scan boarding cards to ensure the accuracy of our accounting records, which includes the accurate reporting of VAT. We request our customers’ boarding cards so that our VAT accounting is in line with the HMRC’s requirements.
It added: “The HMRC and airports accept that this is general practice for all retailers located within airport terminals. Our pricing in airport stores is consistent with our London prices and VAT is not taken into account when setting prices of products. Showing a boarding card is not a compulsory requirement and any of our customers that do not wish to share this information can shop with us without the boarding card being scanned.”
WH Smith said: “WH Smith policy states that boarding passes should be requested from customers, and not demanded, such that there is no obligation on the part of the customer.
“Whilst much of what we sell, eg newspapers, magazines and books, is fixed price and does not attract VAT, any VAT relief associated with the identification of customers travelling outside of the EU is reported in accordance with UK legislation, and any relief obtained is reflected in our single price and extensive promotional offers provided to all of our customers. Operational and financial system constraints make any form of ‘dual pricing’ for our extensive product file a practical impossibility.
“The destination data, regardless of whether it is to the UK, EU or beyond allows WHSmith to analyse the purchasing trends by time of day and by product category for customers travelling to different locations, and assists us in product ranging and placement decisions at our airport stores. This information is limited to the IATA three-digit destination airport codes, which form the basis of IATA’s worldwide airport database and does not give access to any personal data of WH Smith customers.”
Many Twitter users have vowed to refuse to show boarding passes at airport stores.
They included the classical music broadcaster Petroc Trelawny
oh to fly somewhere again so I can enjoy the small pleasure of refusing to show my boarding pass when I buy essentials at Boots and Smiths
Here’s a sample of others:
@whsmith @boots Last time I ever show you my boarding pass you slimebags. Unbelievable!!! http://t.co/EjKDgP2aRq
Quite looking forward to refusing to show my boarding pass at WH Smiths or boots when I go to the airport next week
@WHSmith going through Heathrow this morning. Following VAT revelations in news this morning,in your stores do I HAVE to give boarding pass?
@Laconic_doc next time they ask in Heathrow WH Smith or Boots I will refuse and tell them they have no legal right to ask for boarding pass
It is not a legal requirement for passengers to show their boarding cards when buying supposedly duty free goods. But customers reported problems when they refused to show their boarding passes.
@BBCBreakfast I declined to show boarding pass at Dixons, LGW last month. Was told 'it is the law' - would not process sale without it.
In a email to the Guardian, Fowler added: “I flew out of Gatwick last month and needed a pair of headphones. When asked by Dixons staff for my BP I said I would rather not show it, which I think flummoxed them. I was told that they couldn’t process the transaction without it. I said that I wasn’t required to show my boarding pass and that’s when I was told ‘it’s the law’.
“After an ‘it’s not’, ‘it is’ exchange, I left the headphones on the desk and walked away wondering whether the staff actually believed that it was the law or whether that was the line they were asked to tow [sic] by management.”
@Peston I bought a bottle of water at Gatwick airport and questioned why I had to show my boarding pass in Boots. They were not impressed.
Dixons has yet to comment on the claims.
Related: The Boarding Pass Revolt: why passengers are taking a stand