Boots enacts VAT relief at its UK airport airside stores

By Luke Barras-hill |

bootsBoots has followed in the footsteps of WHSmith and introduced conditions under which travellers from UK airports to non-EU destinations are eligible to receive a VAT reimbursement on goods purchased instore.

Boots has confirmed to TRBusiness that it has re-introduced boarding pass checks at 29 airside stores in its UK airport’s network, in line with HM Revenue and Customer requirements, and will apply VAT savings to purchases costing £5 or more for those passengers.

The move, effective yesterday, follows last year’s decision by WHSmith to refund VAT to passengers after the retailer became embroiled in a 2015 scandal involving some airside retailers who were accused of pocketing the savings at till point rather than passing them on to consumers.

Boots was also heavily criticised during the scandal and issued a statement at the time clarifying its position on boarding cards.

In this, it made clear that their presentation was not mandatory, but it had taken the decision to no longer ask customers to display them while it undertook a longer term review of the situation.

Now, after the review, it has decided to start passing on VAT savings to those passengers.

Boots says it will now request boarding passes and scan them at its tills to ascertain whether passengers qualify for any savings.

COMPREHENSIVE REVIEW 

In a statement issued to TRBusiness, Asif Aziz, Director of Stores, South and Airports, Boots UK said: “We know Boots UK customers love shopping at our airside stores to pick up last minute purchases, prescriptions or a Boots Meal Deal. Over the past year we’ve been carrying out a comprehensive review of VAT relief concession at these stores to find the right solution to meet customers’ needs, while keeping our prices the same great value as in our high street stores. We have introduced a new scheme in which customers travelling outside the EU will not pay VAT on VATable items which are priced at or above £5.

WHSmith-Stansted-Airport

WHSmith announced its decision to refund the VAT component on products priced £6 or more to all travellers going from UK airports to non-EU destinations in July last year.

“The £5 price point was chosen because it is the price at which customers will receive a meaningful saving.”

Many items sold at less than £5 in Boots airport stores are subject to zero-VAT (i.e food, newspapers, books, prescriptions, baby products), while others (i.e women’s sanitary products) are subject to VAT at a 5% rate.

This is in contrast with the vast majority of items greater than £5 charged at the 20% rate, which are subject to discount.

The company says that while passengers will not be forced to show their boarding cards, any refusal to do so would result in them being charged the standard VAT rate irrespective of the price or destination of travel (NB: VAT cannot be reclaimed for purchases within the EU).

As reported, then-Chancellor of the Exchequer George Osborne began an enquiry into airside VAT-free shopping in December 2015.

At the time, he called any VAT windfall that was pocketed by retailers instead of the VAT concession being passed onto travellers as “simply unacceptable”.

The UK Treasury had previously said that “airside retailers are keeping up to an estimated 50p of every £1 of potential VAT savings instead of passing those savings on to shoppers”.

When pressed on how the changes would be communicated at till point, a Boots spokesperson told TRBusiness that the company has been working hard to ensure customers have a full understanding on the conditions under which they are eligible for a VAT discount.

Boots stores will be equipped with information and materials such as banners, posters and take-away leaflets to inform customers of the changes, and eligibility for any VAT relief, while Boots employees will be on hand to answer questions from customers should anything be unclear.

SINGLE PRICING POLICYBoots

Boots offers a single price to all customers on individual items marked under £5, with VAT savings on these purchases reinvested in a single pricing policy and promotional offers that will benefit all airside customers.

Since the government review, the retailer has conducted extensive talks with airport operators and has signed up to the UK Travel Retail Forum’s new Code of Practice to pursue the correct solutions for customer needs.

Click below to view background articles on VAT , including an exclusive BBC interview in which TRBusiness Managing Editor Charlotte Turner clarifies issues surrounding the debate.

https://www.trbusiness.com/regional-news/international/bbc-talks-to-trb-on-vatboarding-pass-issue/108124

https://www.trbusiness.com/regional-news/europe/whsmith-to-refund-vat-after-2015-airport-scandal/107688

http://www.trbusiness.com/regional-news/europe/uk-treasury-announces-review-into-vat-savings/99665

https://www.trbusiness.com/regional-news/europe/wdf-reacts-to-vat-scam-accusations-from-uk-press/78755

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