Following a damning investigation, WH Smith Travel will now pass VAT savings to non-EU bound customers in its airport branches.
The company had been taking the VAT paid by customers travelling to non-EU destinations and pocketing it, instead of offering concessions, the Independent reported last year.
Dixons and Boots were also accused of the practice during the investigation.
The newspaper reported that customers’ boarding cards were scanned, but “only to allow the retailer to calculate how much they could legally withhold”, contrary to the fact that VAT does not need to be paid if customers are travelling outside of Europe.
Former Chancellor George Osborne demanded “action” on the practice, and Treasury Minister David Gauke said it was “disappointing” to see shops deceiving their customers.
It was “intended to reduce prices for travellers, not as a windfall gain for shops”, he added.
Previously, WH Smith called the dual pricing model for customers flying inside and outside of the EU “a practical impossibility”, with “operational and financial system constraints”.
They have now, however, implemented a system allowing customers to save on VAT.
For customers to qualify for savings on purchases, they must pass a threshold set at £6 and agree to have their boarding cards scanned.
“Following customer research, focus groups and an in-store trial, WH Smith has introduced a new approach to the VAT relief concession at UK airports in time for the peak summer season”, said a spokesperson for WH Smith.