Wiltonpark issued vouchers to their customers to pay the dancers and the club then charged the self-employed dancers a 20% fee to cash-in the ‘Secrets’ branded ‘money’. The club argued that the fee charged didn’t attract VAT as they were simply holding the money safely on the dancers’ behalf - HMRC disagreed.
The Court of Appeal has agreed with HMRC that the club’s income from charging dancers for redeeming the vouchers is in fact taxable.
Jim Harra, Director General, Customer Strategy and Tax Design, HMRC, said:
“HMRC always intervenes when it seems to us that tax due under the law is not being paid. This is a prime example. Our work ensures that everyone pays the tax due, creating a level playing field for all businesses.
“We’re investigating clubs who use similar schemes and there’s a potential tax liability running into the millions at stake - money that is needed to pay for the UK’s vital public services.”