Lap dancing club wins tax appeal

Self-employed dancers pay a fee to operate in the clubs

Spearmint Rhino has won its High Court appeal against a ruling that it has to pay VAT on the earnings of its dancers.

It means that the lap dancers must pay VAT themselves, although they only have to be VAT registered if they earn more than £60,000 per year.

David Milne QC representing Spearmint Rhino argued that the club should not pay because it was the dancer and not the club that provided the services.

Self-employed dancers pay to use its facilities and are paid by the clients.

A statement from HM Revenue and Customs said, "HMRC will consider the High Court's decision carefully before deciding what further action to take, including whether to appeal."

Like running an airport

Mr Milne drew a parallel between operators of lap dancing clubs and airports.

He pointed out that if he were to buy a cup of coffee or a camera from an outlet in the departure lounge at Heathrow, it would be supplied by the retailer and not by the airport's operator, BAA.

He said that the retailers paid for the "privilege of trading in the lucrative departure area" just as the dancers pay for the use of booths at the clubs.

The original ruling was made on the basis that the dancers were the agents of Spearmint Rhino because of the degree of control the club has over them through their Dance Performance Licences.

The licence requires the dancers to try to maximise sales and entertainment; they have to pay damages to the club if they miss a session that they have booked.

They are also subject to a code of conduct governing their contact with the clients.

Court of Appeal judge Lord Justice Ward described the club's aim in an earlier case as "to tease and not to satisfy".