UK airport retailers urged to pass on VAT savings to customers

LONDON (ShareCast) - (ShareCast News) - Retailers at UK airports have been urged to pass on sales tax savings to customers by government ministers after it emerged that some are keeping the extra money when passengers present their boarding cards. Shops have been demanding customers show their boarding cards before purchase to identify their travel destination. If the journey is outside the EU the retailer does not have to pay the 20% Value Added Tax (VAT) to the Treasury. Passengers have been complying for years in the belief that it was a legal requirement.

UK Chief Secretary to the Treasury David Gauke said that the VAT relief was put in place to "reduce prices for passengers" rather than 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." Some of UK's biggest retailers such as Boots, Dixons or WH Smith (LSE: SMWH.L - news) have been accused of failing to pass on the savings to customers. On the other side, Harrods sells all its products duty free in its Heathrow stores.

The revelation has angered consumers, who have already commented they will not show their boarding cards to prevent retailers from cashing in.

James Daley, founder of consumer campaigner group FairerFinance, commented that 'duty-free' shops were fostering a myth that it was always cheaper to buy things at the airport.

"But in reality it often isn't any cheaper, and by waiting to make a purchase at the airport, you're limiting yourself to a smaller choice of retailers and items (Other OTC: UBGXF - news) ."