Saturday, June 25

End airport shopping rip-off with new laws: ministers told



Heathrow shops decline customers who refuse to show boarding passes Shops should be forced by law to reduce their prices in airports, the retail watchdog has said, as it urged ministers to pass new legislation to end the VAT rip-off.

Boots, WH Smith and other stores claim millions in VAT discounts on items sold to passengers travelling outside the EU, but many fail to pass on the 20 per cent saving to customers.

The rip-off has drawn criticism from the Government, but Dean Dunham, the retail ombudsman, said nothing would change without further action.

“We don’t have any powers to make retailers adhere because [passing on the VAT relief] is not law,” the head of the dispute arbiter told BBC Radio 4.

“The Government needs to make this a law [and] say to the retailers in airports you must, not we want you to, you must pass on this relief and you must make it very clear to your shoppers what it is they are getting for their money.”

Most shops at airports ask travellers to present boarding cards to make purchases. The firm can then avoid paying 20 per cent VAT if the customer is travelling outside the EU . Yet there is no legal requirement for passengers to oblige, and more than 50,000 people in a poll on The Telegraph website said they would refuse in future.

On Wednesday, however, reporters from this newspaper found many shops at Heathrow were declining customers who refused to show their boarding cards.

Reiss, Thomas Pink, Louis Vuitton and Gucci were among the stores that insisted it was necessary as, unlike some airport shops, their customers do benefit from VAT-discounted prices.

In some cases, people were asked for their boarding cards when trying to buy water, newspapers, or sandwiches. These items are always VAT-free, so the requests only resulted in needlessly lengthening the queue at shops such as World Duty Free.

Shop staff in Boots said as many as half of customers were refusing to give their flight details. In defiance, one person waved above their head the pages of a newspaper displaying the story.

The Telegraph also found evidence that customers who complained were wrongly told it was a “requirement” under airport rules for all shops to check boarding cards.

In the text of an email, seen by this newspaper, a Dixons Travel representative wrote: “I can confirm that the requirement to check the boarding pass at all our airport stores is in compliance with the BAA rules and this is not our own policy.”

When challenged, a spokesman for the company said: “We can confirm that this is not our policy and this advice was incorrect.”

As the shopper revolt escalated, Boots and Dixons issued new guidance to staff reminding them that customers were within their rights to refuse to give flight information.

But pricing analysts warned shoppers they would face higher prices if the revolt continued. HM Revenue & Customs confirmed it would block shops from claiming a VAT discount without “evidence” of travel outside the EU from a boarding pass, potentially hitting company profits.

James Brown, of Simon-Kucher & Partners, which advises retailers on prices, said: “Retailers are pocketing the margin they make from VAT discounts and if they are unable to claim on this relief in future, it will ultimately lead to higher prices for shoppers.”

Lord Toby Harris, chairman of the National Trading Standards Institute, said shops that failed to pass on the relief were “quite clearly profiteering”. Retailers should have two queues with different prices for customers travelling inside the EU and those going further afield, he suggested.