Watch retailers vow to end confusion over airport VAT relief

A number of high-profile watch retailers and boutiques have agreed to honour a new code of practice that requires them to provide greater transparency on how customers benefit from VAT relief concession at their airport stores.

The code is the idea of the Airport Operators Association (AOA) and the UK Travel Retail Forum (UKTRF), which want to ensure there is no confusion when customers purchase products at airport outlets.

Watch retailers that have signed up to the code include Bvlgari, Dixons Travel, Fortnum & Mason, Harrods, Hermes, Ted Baker, Watches of Switzerland and World Duty Free.

Story continues below

Overall, retailers representing more than 75% of retail sales at UK airports have put their name to the code.

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.

Retailers that have signed up to the code must report to the UK Travel Retail Forum (UKTRF) on how they have implemented it.

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

Darren Caplan, chief executive of the AOA said: “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, added that the code ensures 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,” she said.

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.