The UK has just woken up to the fact that retailers at airports have been playing the VAT system.

The focus of the media coverage has been on the VAT money, failing to give much emphasis to the fact this is also a sophisticated and coordinated attack on personal privacy.

This situation has been obvious to me for years and it doesn't just occur in the UK. Whenever one of these retailers asks me for a boarding pass, I always refuse. Sometimes they lie to me and tell me that it is mandatory to let them scan my boarding pass: I tell them that a travel companion has the boarding passes and at this point they usually find some way to complete the transaction without further comment.

It is only necessary to pay the correct amount

With the rise of payment cards, people seem to be forgetting that you can pay for things in cash. If I have the right change to pay for something in this scenario, I typically put it on the counter and walk away. Why should I have to waste my time helping a poorly trained cashier understand VAT? I already deal with enough computer problems in the job I'm paid to do, why should I lose my time when on vacation explaining to a cashier that their computer is failing to correctly deduct 20% VAT?

Whenever showing a boarding pass or passport

It is far too common for people to try and scan or copy documents these days. When somebody in an airport shop or hotel asks to see a document, I don't let it out of my hands. It is not hard to cover the barcode with your fingers too. This prevents them making an unauthorized copy or using a barcode scanner to extract personal data. Some of these staff literally try to snatch the documents out of people's hands and drop them onto a scanner next to their till. In some countries hotels are obliged to look at your passport and make a record of the name but they often have no obligation to photocopy or scan it and it is often a huge risk if they do.

If the airports are genuinely concerned about the security of passengers, they would be just as thorough in protecting data as they are in the hunt for terrorists. For example, they could give VAT-free passengers colour-coded boarding passes or some other vouchers without any personal information on them.

VAT diversion funds customer data grab

Shops pocket an extra 20% of the price of a product and they condition everybody, staff and customers, to having all customer data expropriated from the boarding pass at the point of sale, even the customers not eligible for a tax refund are unnecessarily having their data hoovered up in this way. The VAT money diverted away from both the tax man and the customer is rolled back into the system to fund the data grab. UK law promises customers significant protection from unlawful use of personal data, so how can these retailers lie to passengers and tell them that scanning the boarding pass is mandatory? Why not ask the Information Commission's Office to check up on this?

Paying the correct amount and walking away

It is not hard for people to add up the amount of VAT included in a price, deduct it themselves, give the correct and exact amount of cash to the cashier and walk away. Just type the price into your smart phone, divide by 1.2 and you can see the amount to pay. For example, if a product costs £24.95, just type 24.95 ÷ 1.2 into the calculator on your phone and you find that you have to pay £20.79.

It may only be necessary to show a boarding pass or ID for purchasing duty-free alcohol or tobacco.

Not just for airports

Carrying a correct amount of cash doesn't just help navigate the data grab in airports. Consider some of the other scenarios:

  • A long queue at the cashier in a petrol station, typically on a Sunday afternoon. Did you ever notice somebody who just walks past the queue and puts the exact change (or a cheque) on the counter and drives away while everybody else is waiting to pay with some payment card and scan their loyalty card?
  • Restaurant in a tourist spot, you receive a bill and notice they have added VAT and service charges or something you didn't ask for like bread. In European countries and Australia, the price next to each dish on the menu is the only price you have to pay, just like the price on the shelf in a shop or the price on a web page. If you have the right change you can just pay that amount and walk away without a discussion. In the US the taxes are added later and some tourist hot spots in Europe try this with English speaking customers, thinking that if they are American they won't complain.
  • Hotel tries to insist on a currency conversion when charging your credit card. Maybe you've already realized that dynamic currency conversion (DCC) used by retailers often adds at least 3% to a purchase but some hotels try to go way beyond this. The booking confirmation page you printed from their web site gives you a total price in one currency, perhaps USD or EUR and they use some arbitrary exchange rate, with a whopping 30% margin or more, to convert to the local currency and ask you to insert your PIN number or sign a credit card authorization. The best answer to this practice is usually to carry banknotes in the currency used for the booking, paying that exact amount in cash and if they try to argue, just keep counting out the bank notes to prove it matches the confirmation page. Hotels only get away with this trick because few people check the rate, even fewer carry sufficient cash and you may not be able to use local cash machines to get the currency specified in your booking. This is a situation I've encountered in eastern Europe and South America where it is common to quote in EUR and USD even if that isn't the domestic currency.