Duty Free shops require you to show your boarding pass to ensure you are taking an international flight. But other shops in the UK were asking people to show their boarding passes.
It turns out that some of the non-duty free shops were profiting off non-EU citizen’s purchases.
Last summer it was revealed how the retailers’ requirement that passengers show their boarding pass was being used to make 20 per cent tax-saving profit on people flying outside the EU, rather than pass the reductions onto the customer. This sparked fury in travellers, with passengers refusing to show their documents to staff across the country.
In other words, the shops don’t have to charge people flying outside the EU VAT. So they scan boarding passes to keep track of the non-EU flights. But some of the stores are using that to pocket the difference, rather than relieve the customer of the VAT.
The Telegraph article mentions that Harrod’s will pass the entire savings onto the customer. But other stores, such as Boots, are not doing this and are pocketing 100%.
Some stores have started voluntarily disclosing whether or not they pocket the VAT refund, but the UK is also looking into the issue.
As for Brexit?
This issue will become more pertinent when Britain leaves the EU, which would mean more travellers are subject to VAT refunds. However, before then the Treasury is expected to publish a long-awaited report on airport VAT after it emerged retailers were pocketing refunds that should have been passed on to their customers.