Airport retailers scam

Annasopra

In recent days in the UK it has emerged that when a retailer sells a product to someone who is travelling outside of the EU they can claim VAT refunds once the boarding pass is produced but that producing boarding passes is not mandatory.


http://www.independent.co.uk/news/uk/home-news/airport-vat-scam-treasury-ministers-demand-an-end-to-ripoff-charges-as-grassroots-passenger-rebellion-gathers-pace-10450819.html

It has now emerged this happens in Ireland too

http://www.irishtimes.com/business/retail-and-services/passengers-not-obliged-to-show-boarding-cards-in-airport-shops-1.2314584

seamus

Not sure how it's a scam. It's a pain in the hole to be asked to produce your boarding card, but it's not a scam.

cml387

I've been asked to present a boarding card to buy a newspaper :rolleyes:

If it is your interest (in the case of buying duty free goods e.g drink or ciggies and are tavelling outside the EU) then do present the boarding card. Otherwise don't bother.

biko

A scam usually means someone lose money, not that they have to produce a document unnecessarily.

twowheelsonly

seamus wrote: »

Not sure how it's a scam. It's a pain in the hole to be asked to produce your boarding card, but it's not a scam.

Well generally speaking most people are under the impression that the shops are cheaper as they're Duty Free. They are but in most cases the only ones gaining from the lack of duty are the retailers themselves.
For most consumer goods (outside of Alcohol and Tobacco) the prices in the airport are identical or almost identical to the high street shops so for the retailers to claim that they're 'spreading out' the savings to all of their customers is a bit disingenuous.
More sleight of hand than scam but IMO cold easily fit into the scam category.

biko

biko wrote: »

A scam usually means someone lose money

The Exchequer loses money if the firms are retaining profits that should rightly be allocated as tax, or else passed to customers.

The Backwards Man

Where I come from, we call this 'sound business management'

mikeym

I was under the illusion that you had to produce it for security purposes.

The Backwards Man

mikeym wrote: »

I was under the illusion that you had to produce it for security purposes.

Ha, if somebody hijacked a 747 with a copy of the Daily Sport and a packet of winegums, the last WH Smith would want is it coming back on them.:pac:

Annasopra

biko wrote: »

A scam usually means someone lose money, not that they have to produce a document unnecessarily.

It's a scam because the retailer is getting a discount on that product but not passing the discount onto the consumer

suicide_circus

Joeytheparrot wrote: »

It's a scam because the retailer is getting a discount on that product but not passing the discount onto the consumer

Depends on the product. in dublin airport two litres of Gordons gin and ten packs of marlboro lights will set you back 65 euro when you produce your boarding pass to a non EU destination....in a shop that would cost you closer to 170euro

Shep_Dog

Joeytheparrot wrote: »

It's a scam because the retailer is getting a discount on that product but not passing the discount onto the consumer

To be precise, they are charging VAT to people travelling outside the EU and keeping the VAT for themselves instead of passing the whole amount of the exemption on to the customer. They claim to pass some saving to all customers, but are obviously not going to disclose the details of who gets what, no doubt, due to 'commercial sensitivity'.

In the case of people travelling inside the EU, they are collecting excessive personal data for the purposes of the transaction.

in neither case are they disclosing the purpose of the data collection.

cml387

What I don't understand is the assertion that if not showing boarding cards when it's not necessary will lead to an overall increase in prices.

It's mandatory to show a boarding card if attempting to buy duty free, to prove you are actually leaving the EU, so no change there.

Why should a refusal to show a boarding card when buying duty paid goods lead to an increase in overall prices?

jack presley

I liked the line from the DAA bloke saying that one of the reasons they did it was to plan staff rosters. How does he think businesses outside of the airport who can't ask for boarding cards survive? Is scanning the item and recording the purchase on the till not sufficient for this? Chancer!

oppenheimer1

A couple of weeks ago I was going to buy a camera in one of the airside shops. I called in advance for a price which I was given. Since I was flying outside the EU I asked about the VAT exemption and was told they didn't do that. I'm glad I didn't buy it there now if they were going to pocket the 23%.

keithclancy

I might be on my own here but I always thought this was the case.

Can you imagine having dual pricing on every single product in the airport shops ?

You'd have the screamers on why they don't get a discount on foodstuffs, such as bread, butter, cheese, cereals, condiments, flour, fruit, herbs, meat, milk, pasta, pastes, sauces, soup, spices, sugar, and vegetables (fresh or frozen). Since this is VAT Free anyway.

Then the screamers that would complain about digestive biscuits getting less of a discount than chocolate biscuits.

Would be completely confusing for the customer, afaik they just pass the ability to write off VAT for customers leaving the EU on all products.

ohnonotgmail

keithclancy wrote: »

I might be on my own here but I always thought this was the case.

Can you imagine having dual pricing on every single product in the airport shops ?

You'd have the screamers on why they don't get a discount on foodstuffs, such as bread, butter, cheese, cereals, condiments, flour, fruit, herbs, meat, milk, pasta, pastes, sauces, soup, spices, sugar, and vegetables (fresh or frozen). Since this is VAT Free anyway.

Then the screamers that would complain about digestive biscuits getting less of a discount than chocolate biscuits.

Would be completely confusing for the customer, afaik they just pass the ability to write off VAT for customers leaving the EU on all products.

i'm not sure what you mean by the bit in bold. they charge VAT to passengers traveling outside the EU and then keep the VAT for themselves.

Call me Al

I was in the House of Ireland in Dublin airport and was travelling outside the EU. I bought an item and after she asked where I was travelling to and I had presented my boarding card, I was given the VAT deduction off the listed price.

I don't see how application of the appropriate VAt deduction can be that complicated to coordinate. Maybe not on low value high volume purchases like sweets or newspapers, but definitely yes for bigger items.

rubadub

cml387 wrote: »

Why should a refusal to show a boarding card when buying duty paid goods lead to an increase in overall prices?

Because they will not longer have this income, which they say they are passing on.

In this way, we pass on VAT savings for duty-free passengers to all of our customers

Not sure how everybody is seemingly so 100% certain that their prices are not based around the assumption they will get some money back. There is usually competition between shops in airports. I would expect rent on a newsagent in an airport is a lot more than one in some small town. It would be very odd for them not to take it into account when setting competitive prices.

If the shop wants to maintain the same profit but is losing out on previous savings then I would certainly expect its prices to increase. If VAT went up to 50% today I would similarly expect shops to increase prices, its pretty similar.

ohnonotgmail

rubadub wrote: »

Because they will not longer have this income, which they say they are passing on.



Not sure how everybody is seemingly so 100% certain that their prices are not based around the assumption they will get some money back. There is usually competition between shops in airports. I would expect rent on a newsagent in an airport is a lot more than one in some small town. It would be very odd for them not to take it into account when setting competitive prices.

If the shop wants to maintain the same profit but is losing out on previous savings then I would certainly expect its prices to increase. If VAT went up to 50% today I would similarly expect shops to increase prices, its pretty similar.

do you honestly believe them? I dont find prices in airport shops to be any way cheaper than normal.

keithclancy

ohnonotgmail wrote: »

i'm not sure what you mean by the bit in bold. they charge VAT to passengers traveling outside the EU and then keep the VAT for themselves.

I thought it was explained clearly in their statement:

http://www.irishtimes.com/business/retail-and-services/passengers-not-obliged-to-show-boarding-cards-in-airport-shops-1.2314584

The DAA said shops run by its subsidiary Aer Rianta International (ARI) “offer a single price to all customers across many product categories, whether they are travelling to a duty paid or to a duty-free destination. In this way, we pass on VAT savings for duty-free passengers to all of our customers.”

The only way to pass on the savings to individual customers would be to have dual pricing on all VAT Chargeable products, which would not be feasible.

ohnonotgmail

keithclancy wrote: »

I thought it was explained clearly in their statement:

http://www.irishtimes.com/business/retail-and-services/passengers-not-obliged-to-show-boarding-cards-in-airport-shops-1.2314584

do you believe them?

Daith

keithclancy wrote: »

The only way to pass on the savings to individual customers would be to have dual pricing on all VAT Chargeable products, which would not be feasible.

It's entirely feasible with most retail systems.

keithclancy

ohnonotgmail wrote: »

do you believe them?

If you don't believe them then don't buy anything in the Airport.

Daith wrote: »

It's entirely feasible with most retail systems.

It's confusing for the customer, shopping in the U.S. for example with pre-tax prices and trying to work out discounts with 3 for 2 offers is ridiculous.

Daith

keithclancy wrote: »

It's confusing for the customer, shopping in the U.S. for example with pre-tax prices and trying to work out discounts with 3 for 2 offers is ridiculous.

Ok but it's entirely feasible for them to implement it if they wanted to have dual pricing.

Mr. Incognito

Adding 21% tax to a product that shouldnt attract tax and then keeping that money is most certainly a scam.

It is misrepresentation, and in my book. Illegal.

keithclancy

Daith wrote: »

Ok but it's entirely feasible for them to implement it if they wanted to have dual pricing.

Of course it's technically feasible.

In real world terms you'd have two old people in a queue with the person behind the desk trying to explain why her chocolate biscuits cost X amount because she's going to Norway and the person next to her in the queues chocolate biscuits cost Y amount because she is going to Denmark.

Another point would be that Customs would have to run a control on all passengers buying anything in the Airport Shops.

Daith

keithclancy wrote: »

Of course it's technically feasible.

In real world terms you'd have two old people in a queue with the person behind the desk trying to explain why her chocolate biscuits cost X amount because she's going to Norway and the person next to her in the queues chocolate biscuits cost Y amount because she is going to Denmark.

Shop assistant: "Hi the reason it's dearer is because we have to charge VAT as you're flying in the EU."

Old Person: Okay

People will get used to it.

ohnonotgmail

Daith wrote: »

Shop assistant: "Hi the reason it's dearer is because we have to charge VAT as you're flying in the EU."

Old Person: Okay

or more likely:

Shop assistant: "Hi the reason it's cheaper is because we dont have to charge VAT as you're flying outside the EU."

rubadub

ohnonotgmail wrote: »

do you honestly believe them?

I believe the prices they set will take into account the potential savings on VAT. Do you think they would totally ignore it?

I am not saying they pass on exactly 100% of the savings, that would be foolish and almost impossible to do, as they are going to be unsure of the savings.

I very much doubt the boots selling an item in the airport is getting the exact same profit plus the vat difference than selling it in some low rental area.

ohnonotgmail wrote: »

I dont find prices in airport shops to be any way cheaper than normal.

As I said rent will be far higher in airports so I would expect products to be more expensive, just like a pint in temple bar typically is.

If tourists could flash their passport ONLY in temple bar and the pubs got the VAT & duty back then they could afford to lower their prices and maintain the same profit. Some might not drop but they can expect less customers as there is free competition and their neighbouring bar could afford to drop there's. They would be idiots to simply ignore it.

Again I don't get how people are so 100% certain that the shops totally ignore this saving when determining competetive pricing. Its the same with shops selling mulitpack bars, people often seem 100% sure that it makes absolutely no difference to their pricing.

http://www.independent.co.uk/voices/comment/airport-vat-scam-are-high-airport-rents-rather-than-greedy-retailers-to-blame-10450825.html

Why is it that a respected retailer such as Boots would knowingly indulge in the slightly underhand practice of pocketing VAT savings without passing on the benefits to its customers?
The answer may lie in the prices retailers themselves are charged for the privilege of opening a store in the captive market that is the airport departure lounge.

Exact figures are hard to come by but Heathrow alone last year made around £400m in rental income from concessions, including food outlets, in its airport stores. Unlike on the high street Heathrow does not charge its stores a set flat rent – but rather a percentage of their net sales.

This rate varies from retailer to retailer and the figures are not publicly available. But Heathrow has 345 concessions which means, on average each retailer is paying over £1m a year in rent.

If people do refuse to show cards I would expect it to increase and would just make sure to buy stuff before going to the airport where I would accept shops have to charge a lot more.

ohnonotgmail

keithclancy wrote: »

Of course it's technically feasible.

In real world terms you'd have two old people in a queue with the person behind the desk trying to explain why her chocolate biscuits cost X amount because she's going to Norway and the person next to her in the queues chocolate biscuits cost Y amount because she is going to Denmark.

Another point would be that Customs would have to run a control on all passengers buying anything in the Airport Shops.

why would customs need to do that?

keithclancy

Daith wrote: »

Shop assistant: "Hi the reason it's dearer is because we have to charge VAT as you're flying in the EU."

Old Person: Okay

People will get used to it.

Ok so so the person flying to Norway now buys everything for the person flying to Denmark.

How does Customs in Denmark know that the VAT was paid on the goods ?

Do they have to label all packages now with VAT Paid and non VAT Paid like they do with Duty on Alcohol and Cigarettes ?

Daith

ohnonotgmail wrote: »

or more likely:

Shop assistant: "Hi the reason it's cheaper is because we dont have to charge VAT as you're flying outside the EU."

Well I was presuming the old lady getting it cheaper wouldn't be complaining.

As someone who worked in a cash and carry with multiple vat rates applied to different products people do get used to it.

ohnonotgmail

rubadub wrote: »

I believe the prices they set will take into account the potential savings on VAT. Do you think they would totally ignore it?

... snipped or brevity ...



If people do refuse to show cards I would expect it to increase and would just make sure to buy stuff before going to the airport where I would accept shops have to charge a lot more.

the statement from the DAA referred only to shops that it runs itself. does that include the likes of boots?

Daith

keithclancy wrote: »

Ok so so the person flying to Norway now buys everything for the person flying to Denmark.

How does Customs in Denmark know that the VAT was paid on the goods ?

Do they have to label all packages now with VAT Paid and non VAT Paid like they do with Duty on Alcohol and Cigarettes ?

Why not?

You really seem to be going out of your way for retailers adding tax to items that they shouldn't have.

keithclancy

Daith wrote: »

Why not?

You really seem to be going out of your way for retailers adding tax to items that they shouldn't have.

I think your going out of your way thinking about some perceived non saving that you have a bad feeling about because you have become aware of it.

While probably typing your posts on a device made by a company that has found interesting ways reducing their tax payments by huge amounts anyway.

Airport Duty free is quite expensive , check out a NATO store sometime, a carton of cigarettes (Marlboro lights) is 15 euros and 1 liter bottle of Stolichnaya is 7 euros and that's only a 1 hour drive from my house

In the end if there was some mandate to introduce a labeling system for VAT Paid and Non VAT Paid products and also additional controls at Customs to now check all products rather than just Duty Free I would prefer they just got rid of the shopping all together and only have VAT exempt food products.

suicide_circus

keithclancy wrote: »

I think your going out of your way thinking about some perceived non saving that you have a bad feeling about because you have become aware of it.

While probably typing your posts on a device made by a company that has found interesting ways reducing their tax payments by huge amounts anyway.

Airport Duty free is quite expensive , check out a NATO store sometime, a carton of cigarettes (Marlboro lights) is 15 euros and 1 liter bottle of Stolichnaya is 7 euros and that's only a 1 hour drive from my house

In the end if there was some mandate to introduce a labeling system for VAT Paid and Non VAT Paid products and also additional controls at Customs to now check all products rather than just Duty Free I would prefer they just got rid of the shopping all together and only have VAT exempt food products.

Get rid of airport shopping and a lot of people would become unemployed. Travel Retail is big business and creates a lot of jobs.

Daith

keithclancy wrote: »

In the end if there was some mandate to introduce a labeling system for VAT Paid and Non VAT Paid products and also additional controls at Customs to now check all products rather than just Duty Free I would prefer they just got rid of the shopping all together and only have VAT exempt food products.

Won't that confuse the poor old women even more though?

Your argument that "old people will get confused" isn't convincing nor is there anything unfeasible about dual pricing. Or indeed complete strangers buying products for other strangers to save them money.

What if one shop decides not to charge VAT? Will that cause customs to jump in?

keithclancy

suicide_circus wrote: »

Get rid of airport shopping and a lot of people would become unemployed. Travel Retail is big business and creates a lot of jobs.

Indeed, but additional resources at customs would need to be employed to cope with the increased controls for VAT Paid and non Paid products.

That cost also has to be passed on to the traveler regardless of whether you buy anything or not.

For example some authorities don't want certain smaller airports to fly to certain destinations that are known for drug trafficking because of the additional massive investment required to control passengers come from those destinations.

Samaris

This is something I've never been quite sure of - why exactly IS there a duty-free because you're flying out of the country? Buy the goods in Ireland/in an Irish airport, pay as fits the Irish economy and rules, go to Istanbul/New York, done.

I may be missing something essential out of all this, but economic wotsits between country and international travel's never been my strong point.

Beefy78

Plenty of shops, certainly in the UK, charge notably less at their airport stores than they do on their high street stores so I don't think it is at all accurate to suggest that all retailers are just pocketing the benefit. I used to buy loads of things at HMV at Stansted, for example, because the prices were always 10-15% below normal. Next is the same.

keithclancy

Samaris wrote: »

This is something I've never been quite sure of - why exactly IS there a duty-free because you're flying out of the country? Buy the goods in Ireland/in an Irish airport, pay as fits the Irish economy and rules, go to Istanbul/New York, done.

I may be missing something essential out of all this, but economic wotsits between country and international travel's never been my strong point.

Invented in Shannon

https://en.wikipedia.org/wiki/Duty-free_shop

FrStone

keithclancy wrote: »

I thought it was explained clearly in their statement:

http://www.irishtimes.com/business/retail-and-services/passengers-not-obliged-to-show-boarding-cards-in-airport-shops-1.2314584



The only way to pass on the savings to individual customers would be to have dual pricing on all VAT Chargeable products, which would not be feasible.

In years gone by they used always have dual pricing. It's not that difficult at all, produce your boarding pass if you are going outside the Eu and you don't pay the vat. Would much prefer they paid the vat over rather than pocketing it themselves.

cml387

OK maybe I'm dense but I'm still not getting this.

Take duty free away from the equation for a moment.

In this case they are just shops no different than in Mahon Point or Blanchardstown.

I accept that they may be paying higher rents than in a shopping centre, so their prices may be higher.

If they make money somehow on VAT (fair dues to them) on the duty free, then people have to show a boarding card, so there can be no change there.

So what's the issue with people who aren't entitled to duty free not showing a boarding card?

Anita Blow

WH Smith in the airport doesn't charge VAT on their books, travel products etc.

The boarding card info isn't just used for VAT, it's used for stock-taking for certain destinations etc. So if they see that people who fly to NY tend to buy an oversized Toblerone and souvenirs, and they open up another store in another Irish airport that flies to NY they know to stock it with oversized toblerones and souvenirs.

jahalpin

Anita Blow wrote: »

WH Smith in the airport doesn't charge VAT on their books, travel products etc.

The boarding card info isn't just used for VAT, it's used for stock-taking for certain destinations etc. So if they see that people who fly to NY tend to buy an oversized Toblerone and souvenirs, and they open up another store in another Irish airport that flies to NY they know to stock it with oversized toblerones and souvenirs.

Books are zero rated for VAT anyway, they do charge VAT on magazines, newpapers and confectionery, when they record a non-EU boarding card they charge the consumer the same cash price but pocket the extra 9% or 23% themselves