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Airport shops should stop claiming VAT discounts on goods sold at full price to passengers, according to a government minister.
Chief secretary to the Treasury, David Gauke, spoke out after air travellers began refusing to show their boarding cards in protest at an apparent tax ruse.
Gauke voiced concern that some airport retailers were collecting millions of pounds in VAT discounts without passing the savings to consumers.
Stores including WH Smith and Boots ask passengers to present their boarding cards at checkouts.
Rather than providing any benefit to customers, the information is used to circumvent rules on paying 20% VAT on items sold to people who are travelling outside the European Union.
Some airport duty free shops are reportedly making profits of up to 100% on each alcohol sale they make to travellers leaving Europe.
Gauke, calling for the practice to end, told the Independent: “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.”
Thousands of passengers have claimed that they were misled by airport shop staff who told them that presenting the card was compulsory for security reasons. Many said that they would refuse to show their boarding passes in future, according to the Times.
Steve Baker, a Conservative member of the Treasury select committee, said: “Consumers are entitled to expect that tax savings will be passed to them rather than become another addition to the bottom line for companies. I always thought that showing a boarding pass was an official requirement.”
A WH Smith spokeswoman said a system of dual pricing, in which it shows discounts to travellers going outside the EU, is a “practical impossibility”.
She said that “any relief obtained is reflected in our single price and extensive promotional offers”.
Boots charges the same for products it sells in its airport shops as it does on the high street, despite the VAT saving.
A spokesman said: “We are claiming back VAT on a proportion of purchases made by customers flying to non-EU destinations in accordance with current VAT rules set by the HMRC.
“However, showing a boarding card is not compulsory and any of our customers that do not wish to share this information can shop with us without the boarding card being scanned.”
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