The Chancellor George Osborne has launched a review of airside VAT-free shopping, “to make sure VAT savings are being passed on to shoppers”.
The move follows an investigation by the Independent last year, which claimed that retailers were holding onto VAT savings from purchases made by passengers travelling outside the EU.
The topic was one of the most talked about on our forum last year – to read the debate click here.
The report said that the practice was made possible by retailers asking for customers’ boarding passes to ascertain their destination of travel, which led to passengers refusing to show their passes in protest.
According to a statement by the Chancellor, “Currently, some airside retailers are keeping up to an estimated 50p of every £1 of potential VAT savings instead of passing those savings on to shoppers”.
Announcing the review the Chancellor said:
“VAT relief at airports is intended to cut prices for those travellers - not be a windfall gain for shops.
“But many people could be paying over the odds for their purchases because the Government’s VAT concession isn’t passed on.
“This is simply unacceptable. I have launched a review to make sure that this VAT relief benefits those it’s intended for – consumers – whatever time of the year they are travelling.
“This review will consider ways to ensure prices reflect VAT savings as well as savings on duty.”
The review is expected to be completed by early 2016 and will also cover all other airside shopping taxes.