Airport shopping: What are the rules?

Anyone who's been shopping at a UK airport will be familiar with the request to show a boarding pass at the till. In some cases, you are legally obliged to show it, but in other cases you are not.

So are shoppers missing out on discounts that are rightfully theirs?

And are some shops making a mint by failing to pass on the savings?

Who is entitled to a reduction?

Anyone travelling outside the 28 countries of the European Union (EU). Travellers within the EU or the UK have to pay existing rates of duty and VAT.

Goods like sunscreen should be VAT-free at airports for non EU travellers

Is this issue about tax or duty?

This issue is about VAT, not excise duty. Shops that sell duty-free alcohol, such as World Duty Free, are tightly regulated by HM Revenue and Customs (HMRC), and have to account for each sale. These shops usually provide dual pricing - duty paid and duty-free - so customers do make savings.

However other shops sell everything from crisps to sun cream, which carry VAT at 20%. If you are travelling outside the EU, you should not have to pay the VAT.

Retailers including WH Smith, Boots, Dixons and the Body Shop should pass those savings on to customers - but on the face of it not all appear to be doing this.

Are retailers making extra profit?

The accusation is that some retailers are charging customers a VAT-inclusive price, but then not passing that VAT payment onto the government, so saving themselves hundreds of thousands of pounds a year.

But retailers dispute this. Some, like Dixons, say they pass on savings to all customers by having cheaper prices across the board. Others, like WH Smith, say it would be too complicated to have dual prices for those travelling inside, or outside, the EU.

A customer buying a newspaper and a bottle of water, for example, would be entitled to a refund on the water, but not on the paper - if they were flying outside the EU.

Boots says it has a "single pricing structure" for all its UK shops, and claims back "a proportion" of VAT, in accordance with HMRC's rules.

Shops that sell alcohol have to pass the VAT on to HMRC

Do you have to show a boarding pass?

If you are buying cigarettes or alcohol - or anything else - in a duty free shop, you are legally obliged to show your boarding pass, to prove whether you are travelling inside or outside the EU. World Duty Free says you do have to show one in its outlets - regardless of what you are buying. Because it is designated by HMRC as an "export shop", it buys in all its goods VAT and duty free. It needs to see your boarding pass so it knows how much VAT and duty to pass back to HMRC and how much to charge you.

If you are buying goods in a tax-free shop, like WH Smith or Boots, you are not obliged to show your boarding pass.

The difference between duty-free (export shops) and tax-free shops is explained here.

What goods should be reduced?

All goods that carry VAT. That includes soft drinks, sweets, snacks, crisps, mineral water, cosmetics, sun cream, lotions and any medicine not prescribed by a doctor. Books, newspapers and magazines do not carry VAT, so do not qualify for a reduction.

More details of which goods carry VAT can be found here.