The taxman cometh… and imposes a pole tax.

Ever in the desire to bring both my readers the news that really matters, I could not pass on a report in today’s Independent regarding lapdancers and VAT liability.

Apparently the lapdancing chain, Spearmint Rhino, has been in dispute with HM Revenue and Customs over who is liable for any VAT (Value Added Tax) liability on the activities of the “exotic” dancers working at their establishments. A High Court judgment has just ruled that the liability falls upon the dancer.

Explaining his ruling, Mr Justice Mann described the financial transaction in the business of dancers gyrating semi-naked round a pole for money: "A fee of £10 is charged for a semi-nude dance; £20 is charged for a nude dance. The dance is arranged as between the dancer and customer. In addition to those services, the dancer and the customer can agree what is called a 'sit down'. For £250 (a sum which is in fact negotiable) a woman can be engaged to sit and socialise with the customer for an hour." (I wonder how much field research the good justice did…in the interests of ensuring the law was correctly applied of course!)

He described the Spearmint Rhino club in Tottenham Court Road, London, as a "typical example" of a lapdancing venue (requiring one or more visits to the club, also to a number of others for benchmarking purposes I presume…). He said: "A member of the public pays £8 for admission and on entering goes into an area in which he/she may drink, socialise, eat and watch partially clad women dancing on a podium.” (but mainly to watch partially clad women dancing on a podium, you can get the other stuff and any good bar or restaurant)

David Milne QC, representing Spearmint Rhino, had told Mr Justice Mann that the dancer has to pay the club for the facilities she uses and there was no contract between the club and the men she "entertained". Mr Justice Mann he agreed with Spearmint Rhino's case - the operation at the clubs tended to suggest that the dancers are performers "plying their self-employed trade at the club in their own right".

I can’t see HMRC accepting that that lap dancing is an educational or medical service, and thus exempt from VAT. However, the current threshold for compulsory VAT registration is £61000, so any lap dancer earning below this amount (I would have thought that was most of them) would not be forced to register. By doing so theywould be able to offset any input tax suffered against their liabilty but I really can’t see the VAT charged on the purchase of g-strings adding up to very much. Perhaps the biggest biggest problem is going to be where the dancers going to put their invoice pads….

Hmm this post really did seem like a good idea when I started it…