WHSmith denies profiteering from airport VAT payments

WHSmith has denied claims that it has made up to £50m in five years by not transferring VAT discounts to customers at its airport stores. The retailer has described reports in The Independent newspaper that it kept back VAT payments of 20% on purchases by international travellers as "wildly inaccurate".

Airport stores that require travellers flying to destinations outside the EU to produce their boarding cards to make purchases in duty free zones are entitled to the 20% levy. But recent investigations have questioned whether retailers are passing this saving on to customers in the form of lower prices on the goods they buy.

Up until now, handing over your boarding card when purchasing items has been a normal part of shopping at airports. But reports suggest that now that a question mark hangs over whether retailers are passing this saving on to consumers, increasing numbers of passengers are refusing to hand over their boarding cards to airport shops.

An estimated 15% of WHSmith's revenue comes from its airport stores with the rest coming from its prominent high street stores and its online retailing business. Around 40% of passengers from UK airports fly to destinations outside the EU.

This week WHSmith said that it expects its full-year results to be slightly ahead of analyst expectations at £121m following a good performance from its travel and high street arms during the second half of the year. The retailer refused to answer questions about the airport VAT debacle.

WHSmith has previously said that "any [VAT] relief obtained is reflected in [its] single price and extensive promotional offers". It added that much of its items, including books, magazines and newspapers do not attract VAT and that any VAT relief "associated with the identification of customers travelling outside of the EU is reported in accordance with UK legislation".