One of the UK’s biggest shops will today start returning some VAT to eligible travellers.
Passengers flying beyond Europe will get a discount at airport branches of WHSmith – but only for items costing £6 or more.
Airport shops are obliged to collect 20% VAT on all purchases made by travellers within the European Union and pass it on to HMRC.
But for anyone flying beyond the EU – for example to Switzerland, Norway or any country outside the union – no tax is payable. On a £6 bottle of sunscreen, that should mean a saving of £1.
But last summer The Independent newspaper showed that a number of high street retailers were charging VAT-inclusive prices to non-EU passengers and keeping the tax element as profit.
Some passengers who queried the request to show a boarding pass were told it was a “security requirement”. In fact, its purpose was to allow the retailer to calculate how much they could legally withhold.
In response, then-chancellor George Osborne demanded action on the practice.
A Treasury review was expected to report by this summer, but it has been delayed because of the EU referendum and is now unlikely to publish its conclusions until the autumn.
However, The Independent has learned that WHSmith is set to give the appropriate discount for taxable items priced at £6 or more for passengers flying outside the EU. The company is still taking part in the Treasury review, but chose to start its own refund scheme before the main summer holidays.
A spokesman said: “Following customer research, focus groups and an in-store trial, WHSmith has introduced a new approach to the VAT relief concession at UK airports in time for the peak summer season.”
The introduction at UK airports begins today and will be completed by Wednesday.
The £6 figure was chosen because it represents a minimum saving of £1.
The WHSmith spokesman said: “Below £6, the net VAT benefit will continue to be used to lower prices for all customers.”
In order to qualify for the concession, eligible travellers must agree to have their boarding-pass scanned. Anyone who declines will be treated as an EU passenger, with their purchase subject to VAT.