The UK’s Airport Operators Association (AOA) and the UK Travel Retail Forum (UKTRF) have launched a Code of Practice (CoP) for Airport Retailers to ensure greater transparency on how customers benefit from the VAT relief concession for airport retailers.
They say the industry-wide set of guidelines is designed to give clarity to customers by requiring airport retailers to:
• Provide a clear explanation to all customers on how the VAT benefit is used and on when and why customers are required to present boarding passes
• Report to the UKTRF on how they implement the Code.
The two organisations say the new guidelines will enshrine current best practice on VAT relief in airports and will be set out in-store and online.
The move follows recent criticism about how some retailers were alleged to be boosting their profits by failing to pass on VAT discounts to passengers. Travellers shopping at UK airports prior to departure were used to being asked to show their boarding passes to staff when they paid for purchases. Most passengers believed it was a legal requirement for their boarding passes to be scanned. However, it was discovered that some airport stores only asked to scan passengers’ boarding passes so that the retailer could benefit from VAT discounts. The savings made by the retailers were not being passed on to customers by offering lower prices.
Travellers do need to show their boarding passes at duty-free shops when purchasing alcohol, cigarettes or tobacco as they are subject to different Government taxes. However, most items sold by airport shops to passengers flying beyond the European Union are exempt from a 20% VAT charge and there is no legal requirement for passengers to have their boarding passes scanned when buying most items.
Retailers who have signed up to the new Code of Practice will report to the (UKTRF) on how they implement the Code. The initiative is endorsed by UK airports, who will facilitate additional customer enquiries about the code.
Darren Caplan, Chief Executive of the AOA said: “AOA member airports are determined to ensure that passengers have an excellent experience from the moment they arrive at the airport to the moment they leave. We have worked closely with airport partners and retailers to improve information and transparency about how the retailers apply the VAT relief concession, ensuring travellers can continue to shop at UK airports confident in the knowledge that they are getting a great deal.”
Sarah Branquinho, Chair of the UKTRF said: “Our members have an exemplary record of compliance with HM Revenue & Customs laws, Advertising Standards Authority guidelines and Trading Standards Authority consumer legislation, but the Code of Practice will go one step further in ensuring transparency and consumer trust. This new measure will help ensure that customers know that the savings resulting from the VAT relief concession are passed on to them.”