UK. Boots is now refunding VAT to passengers at its 29 airside stores across UK airports.
The health and beauty retailer has completed a year-long review into its airport pricing policy, and is now passing on tax savings to customers flying to destinations outside the European Union (EU) who purchase items priced at £5 or above (as of 14 March).
To do so it has reinstated boarding pass checks to determine passengers’ final destination and whether they are eligible for the VAT refund. The retailer had stopped asking passengers for boarding passes and treated every traveller as liable for VAT in response to a media storm in 2015 over its perceived ‘unfair’ pocketing of VAT savings.
Customers do not have to show their boarding pass to make a purchase but will have to do so if they are travelling outside the EU and would like to claim the VAT.
Boots UK Director of Stores, South & Airports Asif Aziz stated: “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.”
On individual items under £5, Boots is charging a single price to all customers regardless of destination. It said the VAT savings obtained on individual items under £5 that are sold to customers travelling outside of the EU would be reinvested in its single pricing policy and promotional offers.
VAT rates vary significantly on items Boots sells from a zero rating to full UK VAT of 20%, and this helps explain the retailer’s cut-off price of £5. Proportionally, many more items under £5 are not subject to VAT at all or to 5% VAT, so discounts are either not applicable or would be minimal. By contrast, 96% of items £5 or over are subject to full VAT.
WHSmith, which was also caught up in the media storm, began refunding VAT to passengers last year on items priced £6 and above at its UK airport stores.
The Airport Operators Association (AOA) and the UK Travel Retail Forum (UKTRF) launched a voluntary Code of Practice on VAT savings in September that most airport retailers (including Boots and WHSmith) in the UK agreed to implement. The aim was to ensure greater transparency in how customers benefit from VAT relief.
