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VAT falls into the laps of dancers as club wins tax appeal

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26/03/2007

The lap dancing club Spearmint Rhino has won a High Court appeal against a ruling that it had to pay Value Added Tax (VAT) on the earnings of its dancers.

David Milne QC, who represented Spearmint Rhino in court, argued that as it is the dancers who supply the ‘service’ and not the club, no liability for VAT should fall on the club.

The ruling means that the dancers will have to pay their own VAT, which is applied if they earn more than £60,000 a year. Self-employed dancers pay to use its facilities and are paid by the clients.

HM Revenue & Customs said: “HMRC will consider the High Court’s decision carefully before deciding what action to take, including whether to appeal.”

But dancer Shula, who works at clubs in Hertfordshire and Essex, was dismayed at the decision. “I do earn more than £60,000 a year but work extremely hard for it, with very unsocial hours,” she said.

“To pay VAT on my earnings will make a huge dent in my income and I know that many other professionals in the business say the same.”

But Milne argued that the dancers were like the operators of airports. “If I was to buy a cup of coffee or a camera at an outlet in the departure lounge of Heathrow Airport, it would be supplied by the retailer and not the British Airport Authority,” he said.

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