New Code of Practice to ensure greater transparency on how customers benefit from VAT relief in airport shops

The Airport Operators Association (AOA) and the UK Travel Retail Forum (UKTRF) have today 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.

The industry-wide set of guidelines will 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 guidelines enshrine current best practice on VAT relief in airports and will be set out in-store and online.

Retailers who have signed up to the Code of Practice will report to the UK Travel Retail Forum (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.”

Airport retailer categories: how VAT benefit is returned to the customer

Non participants
These retailers do not operate the VAT relief concession and charge customers VAT in the same way as any other store in the UK. These retailers will not ask for boarding cards.

Direct benefit
These retailers sell at a VAT inclusive and a VAT exclusive price for customers who are travelling inside and outside the EU respectively. Hence the price paid by someone travelling outside the EU will be reduced by the VAT that would otherwise be charged. Only customers showing a boarding card for a non-EU destination will be entitled to the lower price and hence benefit from the relief.

Shared benefit
These retailers will have a single price for EU and non-EU travellers* and will recycle the VAT benefit into lower prices for all customers, which may require customers to show their boarding passes to identify qualifying sales. Retailers should make it clear to passengers whether this is an HMRC requirement (as part of an official agreement) or their own operating requirement. In all cases, the retailer will have signage in-store and on their website showing how the VAT benefit is being reflected in prices.
*With the exception of some liquor & tobacco products.

Retailers that have signed the Code of Practice represent more than 75% of retail sales at UK airports. To date they include: