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You can find the current article at its original source at http://www.theguardian.com/money/2015/aug/12/airport-vat-revolt-whats-behind-revolt
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| Version 2 | Version 3 |
|---|---|
| VAT revolt Q&A: can I refuse to show my boarding pass? | VAT revolt Q&A: can I refuse to show my boarding pass? |
| (35 minutes later) | |
| Retailers with shops at airports have been accused of avoiding VAT on purchases by some travellers, without passing the discount on to consumers. | Retailers with shops at airports have been accused of avoiding VAT on purchases by some travellers, without passing the discount on to consumers. |
| Related: Airport VAT row: customers threatening to not show boarding passes | Related: Airport VAT row: customers threatening to not show boarding passes |
| How do they do this? | How do they do this? |
| Retailers on the flight-side of airport security gates are treated as exporters by the taxman. Anything they sell for use outside the European Union is not subject to VAT, so could be sold to a consumer without the tax being added. This means that someone buying suncream for a holiday in Brazil or an Amazon Kindle they intend to read on a flight to Australia should pay less than someone buying the same items for a trip within Europe. | Retailers on the flight-side of airport security gates are treated as exporters by the taxman. Anything they sell for use outside the European Union is not subject to VAT, so could be sold to a consumer without the tax being added. This means that someone buying suncream for a holiday in Brazil or an Amazon Kindle they intend to read on a flight to Australia should pay less than someone buying the same items for a trip within Europe. |
| However, some retailers are charging a single price for customers, regardless of where they are travelling. Customers are asked to produce a boarding pass when they buy something, but rather than getting a discount if it shows they are travelling outside Europe, the information is being used by the shop to save it money. | However, some retailers are charging a single price for customers, regardless of where they are travelling. Customers are asked to produce a boarding pass when they buy something, but rather than getting a discount if it shows they are travelling outside Europe, the information is being used by the shop to save it money. |
| Do all retailers do this? | Do all retailers do this? |
| No, but many of the big high street names do. Boots, WH Smiths and Dixons all charge a similar price for goods sold in the airport to the prices they charge in normal stores. The VAT they are not paying on sales made to those travelling to outside the EU is not passed on, even though they have information from customers’ boarding cards. | No, but many of the big high street names do. Boots, WH Smiths and Dixons all charge a similar price for goods sold in the airport to the prices they charge in normal stores. The VAT they are not paying on sales made to those travelling to outside the EU is not passed on, even though they have information from customers’ boarding cards. |
| What does this mean for duty free sales? | What does this mean for duty free sales? |
| Some VAT-free purchases – cigarettes, tobacco and spirits – also involve other duties. Retailers offering those items flightside can sell them to passengers travelling to outside the EU with all duties removed. If the product is genuinely duty free there should be two separate prices on display. If not, and you are travelling outside the EU, you are not getting the full reduction. | Some VAT-free purchases – cigarettes, tobacco and spirits – also involve other duties. Retailers offering those items flightside can sell them to passengers travelling to outside the EU with all duties removed. If the product is genuinely duty free there should be two separate prices on display. If not, and you are travelling outside the EU, you are not getting the full reduction. |
| How much do they make out of it? | How much do they make out of it? |
| It is impossible to say how much they make in total, but with VAT at 20%, on each sale they can pocket just under 17% of the price paid by every shopper travelling beyond the EU. Two years ago the average spend at Heathrow airport was just under £39 per passenger. | It is impossible to say how much they make in total, but with VAT at 20%, on each sale they can pocket just under 17% of the price paid by every shopper travelling beyond the EU. Two years ago the average spend at Heathrow airport was just under £39 per passenger. |
| Related: 'These shops have been very naughty': passengers react to airport VAT row | Related: 'These shops have been very naughty': passengers react to airport VAT row |
| What does the boarding pass do? | What does the boarding pass do? |
| It is used by the retailer to prove that the sale qualified for the VAT reduction. When the retailer does its tax return it has to have evidence of how many sales were zero-rated, and by scanning your boarding pass it can record which ones were. | It is used by the retailer to prove that the sale qualified for the VAT reduction. When the retailer does its tax return it has to have evidence of how many sales were zero-rated, and by scanning your boarding pass it can record which ones were. |
| Is the saving available to any traveller? | Is the saving available to any traveller? |
| It should be. The rules around airport shopping mean that the 0% rate on goods applies to the items, not the people buying them. | It should be. The rules around airport shopping mean that the 0% rate on goods applies to the items, not the people buying them. |
| Every year some 50 million passengers fly in and out of the UK to and from non-EU destinations. Travellers from outside the EU can reclaim VAT on purchases they make in the UK from retailers displaying a “tax free shopping” sign. In this case the money ends up in the hands of the shopper. | Every year some 50 million passengers fly in and out of the UK to and from non-EU destinations. Travellers from outside the EU can reclaim VAT on purchases they make in the UK from retailers displaying a “tax free shopping” sign. In this case the money ends up in the hands of the shopper. |
| What if it’s something I am going to use before I fly? | What if it’s something I am going to use before I fly? |
| It doesn’t matter. Restaurants and caterers are not subject to the export rules (although much food is VAT-free anyway), but if you buy a packet of sweets from WH Smiths, it will qualify. | It doesn’t matter. Restaurants and caterers are not subject to the export rules (although much food is VAT-free anyway), but if you buy a packet of sweets from WH Smiths, it will qualify. |
| Should I be getting a discount on everything I buy airside? | Should I be getting a discount on everything I buy airside? |
| Not on everything. Books, magazines and children’s clothes, for example, are not subject to VAT wherever you buy them so there is no saving to make. However, on the electronic goods and cosmetics sold in most duty-free shops there should be a discount if your destination is outside the EU. | Not on everything. Books, magazines and children’s clothes, for example, are not subject to VAT wherever you buy them so there is no saving to make. However, on the electronic goods and cosmetics sold in most duty-free shops there should be a discount if your destination is outside the EU. |
| Can you refuse to show your boarding pass? | Can you refuse to show your boarding pass? |
| Many consumers are saying that they will refuse to show their boarding pass to retailers in protest against the news that has emerged. A spokesman for HM Revenue & Customs says: “There is nothing in VAT law to require the production of a boarding pass to purchase goods in airport shops, but without such evidence the supply cannot be zero-rated as an export.” | Many consumers are saying that they will refuse to show their boarding pass to retailers in protest against the news that has emerged. A spokesman for HM Revenue & Customs says: “There is nothing in VAT law to require the production of a boarding pass to purchase goods in airport shops, but without such evidence the supply cannot be zero-rated as an export.” |
| This means that withholding your boarding card will make it difficult, if not impossible, for the retailer to avoid the VAT payment. | This means that withholding your boarding card will make it difficult, if not impossible, for the retailer to avoid the VAT payment. |
| Boots and WH Smiths has said that it is happy for travellers to refuse to show their cards. | |
| Some retailers have self-service checkouts which ask travellers to scan their boarding card, so to refuse you may have to queue up. | Some retailers have self-service checkouts which ask travellers to scan their boarding card, so to refuse you may have to queue up. |
| What about for duty-free shopping? | |
| That is different - HMRC says that retailers selling duty-free goods must check your travel documents. If you are buying alcohol or tobacco at the airport you will have to show your card. If you are in the same shop but only buying a big Toblerone or make-up, there is no legal requirement to prove where you are going. |