Business World

Monday 26 September 2016

Osborne to review airport duty-free sales

Li-mei Hoang and Paul Sandle

Published 03/01/2016 | 02:30

'Vat relief at airports is intended to cut prices for travellers - and not be a windfall gain for the shops,' said George Osborne Photo: Luke MacGregor/Bloomberg
'Vat relief at airports is intended to cut prices for travellers - and not be a windfall gain for the shops,' said George Osborne Photo: Luke MacGregor/Bloomberg

Britain is to review airport retail sales after some businesses were found to be pocketing about half of tax savings meant for passengers, rather than passing on the discount.

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Most retailers at British airports, who include WH Smith and Dixons Carphone, ask passengers to show boarding cards when paying for goods, typically citing security as the reason. However, that some use the information to avoid paying 20pc value-added tax on goods going outside the EU.

The report prompted a backlash from consumers, with many refusing to show their boarding cards to retailers.

Announcing the review, the UK government said that some airport retailers were keeping 50p of every £1 of potential sales tax savings, instead of passing them on to consumers.

"VAT relief at airports is intended to cut prices for those travellers - not be a windfall gain for shops," British finance minister George Osborne said in the statement.

Many people could be paying over the odds for their purchases because the tax concession was not passed on, he said.

The review, which will be conducted by Britain's tax agency in early 2016, will consider ways to ensure prices reflect VAT savings.

Reuters

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