UK Based Global VAT and Tax Compliance Consultants

UK airport operators to provide greater transparency on their VAT charges.

Last year many airport retailers were quietly retaining the 20% VAT discount on sales of goods from their shops to passengers leaving the EU. According to EU VAT rules, this is not applicable.

To retain the VAT funds charged and to comply with HMRC rules, the retailers involved had to record the details of passengers boarding passes. However, the retailers were telling passengers that this was required for security reasons and misleading them.

New guidelines issued by the Airport Operators Association have now created an industry Code of Practice. This requires member retailers to clearly explain their VAT policy and not to insist on board passes if passengers refuse. Where a retailer does offer the VAT refund on sales to passengers leaving the EU, then a record of the loading pass must be required.