Norwich table dancing club in tax row
19:06 29 April 2014
The owners of an American-style table dancing club in Norwich have be ordered to pay VAT on its takings from booths and may be liable to pay a substantial sum in back takings, following a court appeal.
Since 2010, bosses at the Sugar & Spice Club in Prince of Wales Road have been in tax row, with a HMRC inspector visiting the club.
Dancers who work at the venue can earn up to £1,600 a night, by giving private dances in the club’s booths.
But none of the women are employed by the club - instead paying a big chunk of their earnings to use it.
The inspector insisted the club was liable to pay 20pc VAT on the services it provides to the dancers, who pay a £20-40 nightly house fee, as well as 25pc of what they make in the booths.
However, club bosses, Darren Crawford and Simon Goodings, were adamant that the dancers became temporary ‘tenants’ of the booths each time they took a customer behind the curtain for a private dance and that the ‘rent’ they paid was VAT free.
Ruling on the club’s appeal, First-Tier Tax Tribunal judge, Charles Hellier, said dancers were lucky to make £20-a-night in tips from dancing on the club’s main dance floor.
However, they could earn thousands from entertaining clients privately in the downstairs booths.
Judge Hellier accepted that, if the booths were the only facility provided to dancers, that would be a ‘supply of land’ and exempt from VAT.
However, the club also provided dancers with music, advertising, lighting, heating and security - as well as use of the upstairs dancefloor.
The services provided by the club to the dancers went well beyond the ‘passive supply of land’ and were subject to standard rate VAT, he ruled.
The decision means the club must pay VAT on its takings from the booths and may also be liable to a substantial sum in back taxes.