‘It’s an absolute disgrace’: Passengers’ fury at airport VAT rip-off that ‘nets millions of pounds for shops including Boots, Dixons and WH Smith who don’t pass the savings on to the customer’
Shops accused of making millions from tax discounts on duty-free sales
They avoid paying 20% VAT on goods if customer travels outside Europe
But few pass savings on, meaning products are sold at high street prices
Today, customers expressed outrage over companies ‘taking advantage’
Customers have branded major retailers ‘an absolute disgrace’ after it emerged companies are milking their margins at airports by not passing on VAT savings to customers.
The furious reaction comes after it emerged high street giants including Boots and W H Smith insist that airside customers scan their boarding passes at the till so they can avoid paying VAT.
But in many cases they are charging the same prices as they would on the High Street, making millions by bolstering their profit margins with the 20 per cent tax savings.
Although not illegal, the practice has infuriated consumer rights experts and led to calls last night for retailers including Boots, Dixons and WHSmith to come clean with customers.
Today, customer expressed their fury at the widespread practice which many feel is misleading customers.
Thomas Lawrence, from Leicester, was flying to New York with his partner and young daughter.
The 29-year-old said: ‘I think it’s a disgrace really, an absolute disgrace. I think if the shop owners are making so much profit then they should passing that on to the buyers, surely.
‘I’ve just bought a pack of 10 cigarettes for £6.95. I have never paid that sort of price before in my life.
‘Obviously, I would expect to pay a bit more for those sort of products but it feels as if they are taking advantage of people that have no other option than to pay those prices.
‘We end up spending even more on products here because we are stuck here with no commercial shopping centres nearby, so have no option but to pay the higher costs.’
Commuter David Brown was also heading out to the states. The 60-year-old, from Harrogate, North Yorksshire, was preparing for his flight to San Francisco.
‘If they’re not giving anything back then I’m not buying anything,’ he joked.
‘But in all seriousness they ought to be at least sharing that tax saving with the customer.
‘I know what they’re doing is not illegal, they are not avoiding tax, but they should be making it transparent exactly what it is they are doing, and then the customer can make up their own mind as to whether it is worth buying something for those prices.’
Michael Rush was heading to the Napa Valley in California, US, for his cousin’s wedding, and complained that customers had to pay higher prices just for a bit of food or drink to keep them going.
The 29-year-old, from London, was about to embark on an 11 hour flight. He said: ‘I feel you should be getting something back definitely.
‘The products are quite expensive in there anyway, much more expensive than on the high street, but people buy it there because they need a drink to keep them going, especially if you’re about to get on a long flight.
‘With the extortionate prices you’d think they should be offering some sort of discount.
‘You never really think about it and realise it is going on, but I suppose they must be making so much profit.’
After the story was published yesterday, hundreds of people commented on the scandal.
One commenter wrote: ‘Customers are tricked into thinking goods are cheap because of all the duty free signs on show. Truth is it is a rip off.
‘I fly quite often especially between Gothenburg and Heathrow and a lot of the pricing at both airports makes me wonder how people can be so easily fooled.’
Another said: ‘I won’t buy as much as a chocolate bar at an airport for this very reason. The duty free prices in UK airports for non EU flights are far to pricy. These are rip off merchants and UK airports are full of them.’
HALF A MILLION ‘MISS OUT ON PAYOUTS’ FOR LATE FLIGHTS
Half a million passengers a year could be missing out on compensation worth hundreds of pounds when their flights are delayed.
Under EU rules, those flying within the EU who are delayed for more than three hours can be entitled to up to £280. This rises to £420 if the journey is longer than 2,170 miles.
In the past year, 9,000 flights through the UK were delayed for more than three hours, triggering 900,000 potential claims. But six in ten passengers do not claim the compensation they are entitled to after a major delay, according to a probe by consumer group Which?
It urged holidaymakers to ‘hold their airline to account’.
Boots emerged as one of the biggest offenders, according to analysis by The Independent.
For every £8 bottle of Nivea suncream sold at an airport shop to customers travelling outside the EU, it can reclaim £1.60 in tax. The high street price is also £8.
A company spokesman said it uses boarding cards to ensure the ‘accurate reporting of VAT’. Dixons Travel insisted its airport prices are cheaper than those available online.
WHSmith said that boarding passes are requested from customers, not demanded.
HMRC said stores need not pay VAT on goods sold to passengers leaving the European Economic Area – the EU member states plus Iceland, Norway, Switzerland and Lichstenstein.
A spokesman said: ‘Duty free shops may treat the sale of goods to passengers [going to] non-EU destinations as zero-rated exports, provided they retain suitable evidence such as by scanning the boarding card.’
Some customers at the airport did have some sympathy with the retailers.
One customer on his way to Washington in the US, who asked to remain anonymous, said: ‘It’s been like that forever, asking for boarding passes.
‘Maybe the rental prices for these places are so high that they have to offset costs so there are some sympathies there.
‘It would be good if we could meet in the middle a little bit though. I live in the states and fly 90 times a year, I’m a very regular flier, and I am always asked for my boarding pass when I buy goods.
‘My main concern is claiming tax back for tourists, because it is such a complex process in the UK, I do not think I have ever successfully reclaimed tax.
‘If you go to somewhere like Australia the system is so simple and easy, you turn up with your goods and happy days you get your money back right there and then.
‘Here there is willing avoidance on behalf of the UK. The government is not incentivising tourists to consider buying goods to boost the economy doing shopping, and allowing them to get that tax back in a tourist-friendly manner.
‘But I do have my sympathies with the retailers here. I can’t say what the rental prices are, but I imagine they are very high.
‘I have found the prices of goods here to be quite typical. They are equal to or slightly less than those you find on the high street so buyers can get a sense of some degree of a saving.
‘Alcohol is cheaper at least!’
Noel Kennedy was returning home to Cork in Ireland, having spent the weekend visiting friends in England.
The 43-year-old said: ‘I didn’t ever really take any stock of it [retailers making money from tax-free sales].
‘I try to avoid shopping in airports because you get the same thing on the high street for the same price.
‘I have been asked on the other side for my boarding pass when I’ve been trying to buy cigarettes.
‘I am a pretty regular enough flier – I travel between Ireland and mainland Europe.
‘I would say it is fair to say the retailers should be giving something back to the customers though with the money they are saving not paying the 20 per cent VAT.’
Consumer rights experts have led to calls for retailers to stop misleading the millions of customers who come through Britain’s airports.
Holidaymakers were also warned to be wary of goods sold under the guise of being ‘duty-free’ as shops are often the only ones who benefit from airport tax relief.
Consumer affairs expert Paul Lewis said retailers are ‘not being straight with the public’, adding: ‘They are asking to see boarding cards but not telling them that this is so they can make more money by not paying the VAT on what they’re selling.
‘What of course they should be doing is passing on the savings that they make to the passengers who are travelling outside Europe.’
Guy Anker, of the website Money Saving Expert, said: ‘There is an assumption that duty free means cheaper. But that is not the case. All it means is that the stores themselves are not paying the duty.’