VATRESNI3300 - How the scheme works: Administration charges
The decision to charge an administration fee, and its amount, is left entirely to the retailer. HMRC does not get involved in disputes between retailers and customers.
Retailers often apply a fee to cover administrative and handling costs. Larger retailers may use a sliding scale to calculate this fee, whereas smaller retailers typically set a fixed amount independent of the purchase value. These administration charges can generate complaints from customers. Therefore, it's important that both the administrative fee and the net refund due to the traveller are clearly listed on the VAT refund document.
Refund companies base their business on the commission which they charge the traveller for administering the refund.