Particular types of export to destinations outside the EU: Duty free and tax free shops: Overview
Under the terms of an Extra Statutory Concession (ESC), goods sold airside through duty free and tax free shops to passengers departing to non-EU destinations are deemed to be direct exports by the shop and can be zero-rated. The ESC is published in Notice 48 Extra-statutory concessions item no. 9.1
The supplier of goods which are liable to VAT and which are supplied to intending passengers at duty free and tax free shops approved by the Commissioners may, for those goods which are exported directly to a place outside the VAT territory of the Member States, be regarded as the exporter and zero rate the supply.
Duty free shops may operate as special excise warehouses known as export shops provided operating methods are agreed beforehand with HMRC. Excise notice 197A Excise goods:holding and movement (Export shops) covers the general conditions and requirements for excise goods within an export shop.