Airport shops 'pocketing tax break meant for travellers'

Retailers have been urged by the Treasury to cut their prices at airports to reflect VAT discounts they receive for travellers leaving Europe amid claims that some stores are using the relief to boost their profits.

Treasury minister David Gauke stressed that the savings shops made through VAT discounts at airports were supposed to be passed on to customers, not used as a way to boost profits.

He spoke after the Independent revealed that many airport stores were asking passengers to present their boarding cards when making a purchase.

The information on the cards are then used to claim VAT relief on sales to travellers leaving the European Union.

The practice means that retailers do not pay 20% VAT on goods they sell to customers travelling outside the EU.

The newspaper claimed stores such as Boots and WH Smith did not pass on the savings to customers.

The revelation led to intervention from the Treasury, with Mr Gauke insisting retailers should use VAT relief to benefit customers.

He told the Independent: "The VAT relief at airports is intended to reduce prices for travellers, not as a windfall gain for shops.

"While many retailers do pass this saving on to customers, it is disappointing that some are choosing not to. We urge all airside retailers to use this relief for the benefit of their customers."

Mr Gauke's comments come as many Britons leaving the country for summer holidays may be susceptible to the practice.

It is not a legal requirement for passengers to show their boarding cards when buying supposedly duty free goods and many are now reportedly refusing to show them.