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Stripping out the Consideration

February 2017

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WILTONPARK V HMRC : COURT OF APPEAL [2016] EWCA CIV 1294

Wiltonpark operates table and lap dancing clubs. The dancers are self-employed and are paid directly by customers for their services. Payment is either by cash or by vouchers (called “Secrets Money”) which Wiltonpark sells to customers. When a dancer encashes vouchers with Wiltonpark, the club retains a commission of 20%.

The issue was whether the commission was exempt from VAT as being consideration for “money”; or whether it was subject to VAT as being consideration for a bundle of services provided by Wiltonpark, being the facilities provided by Wiltonpark (ie. the club, the bar, the tables etc) which enabled the dancers to make their living.

The judgment of the Court of Appeal was that, while “Secrets Money” was “money”, the size of the commission (20%) indicated that it was paid for something more than just the “Secrets Money” scheme and was in fact consideration for the provision of the facilities of the club which enabled the girls to provide their services.Moral of the story: if you are going to charge your dancing girls a commission make sure that it is less than 20% or you will be charged 20%!

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