Osborne to review airport retailers failing to pass on tax savings

Chancellor George Osborne has unveiled plans to review selling practices at airport shops to make sure VAT savings are passed on to customers.

Osborne, who said some airport retailers are currently holding on to an estimated 50p in every £1 of potential VAT savings, said the “extensive” review will cover all other airport shopping taxes, including duty free.

Osborne said: "VAT relief at airports is intended to cut prices for travellers - not be a windfall gain for shops."

"But many people could be paying over the odds for their purchases because the government's VAT concession isn't passed on. This is simply unacceptable."

He expects the review to be completed by early next year.

Customers are legally required to present their boarding passes when buying cigarettes or alcohol from tax-free airport stores in order to prove they are flying outside the EU.

When purchasing other items, however, those travelling outside the EU are not required to produce their boarding pass.