Value Added Tax (or VAT), is a europe wide sales tax. In the UK it is set at 17.5% for most goods and services. This tax is almost always included in quoted prices in shops, hotels and restaurants.
As in other European countries, non-EU residents are entitled to a refund of the VAT paid on goods taken home with them (note 'goods taken home', so you cannot reclaim VAT on hotel bills, restaurants, tickets etc.).
Some large stores belong to the 'Global Refund' group, a VAT refund service available Europe-wide at 130,000 affiliated stores (look for the sign on doors and some sales counters).
In participating stores you need to ask for the Global Refund form (often called a shopping cheque). You then have it stamped by Customs Officials when you leave the European Union, take the form to one of the more than 700 Global Refund counters - located at every major airport and border crossing - and the VAT paid will be refunded on the spot in the form of cash, check, or a refund to your credit card.
For more information on VAT contact:
HM Customs and Excise
44 York Place
Edinburgh
EH1 3JW
0131 469 2000
Or see the VAT for visitors pages of the HMC&E website