UK Treasury announces review into VAT savings

By Doug Newhouse |

UK TreasuryThe UK HM Treasury and Chancellor of the Exchequer – The Rt Hon George Osborne MP – have today called for a review of airside VAT-free shopping ‘to make sure shoppers share more of the benefit in future’.

 

This new ‘caring approach’ from the UK Government has apparently been launched ‘to make sure VAT savings are being passed on to shoppers’.

 

In a statement today, the UK Treasury said: “As thousands of travellers head off for New Year’s getaways, the Chancellor confirmed that the extensive review will make sure that VAT relief in airports is leading to savings for shoppers, as it is intended to do.

 

“Currently, some airside retailers are keeping up to an estimated 50p of every £1 of potential VAT savings, instead of passing those savings on to shoppers. The Chancellor has tasked HMRC to review airside VAT-free shopping to make sure that shoppers share more of the benefit in future.

 

UK airports VAT Independent

How The Independent newspaper in the UK ‘broke’ the original story on August 12. As in the past, stories about the duty free industry tend to come out on slow news days, although this one looks as though it may run and run.

 

 

“The review is expected to be completed by early 2016 and will also cover all other airside shopping taxes.”

 

In his statement, George Osborne says: “For families flying out of the UK for a winter-getaway, airports should be the ideal place to pick-up a bargain. VAT relief at airports is intended to cut prices for those travellers – not be a windfall gain for shops.

 

George Osborne

The UK Chancellor of the Exchequer – The Rt Hon George Osborne.

“But many people could be paying over the odds for their purchases because the Government’s VAT concession isn’t passed on. This is simply unacceptable. I have launched a review to make sure that this VAT relief benefits those it’s intended for – consumers – whatever time of the year they are travelling”.

 

The government adds that this review will consider ways to ensure prices reflect VAT savings as well as savings on duty.

 

This statement was swiftly followed by another from the UK Travel Retail Forum (UKTRF) which reads as follows: “Shopping has become a much-loved part of travelling through UK airports which lead the world in offering choice and value to passengers.

 

“We welcome the opportunity to show HMRC the value that we offer to consumers and to demonstrate how airport retail generates vital revenue to underpin and sustain the success of British airports.

 

“UKTRF welcomes the opportunity to contribute to the review and to clarify with HMRC how the rules on VAT on sales to travellers are applied.”

 

Considering the UK government has never shown much interest in this subject before and HMRC – which reports to the Treasury – has already seemingly clarified its position following the boarding pass ‘debate’ back in August, it will be interesting to see how the government’s agenda – small, medium, or large – unfolds on this issue.

 

 

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