In Wiltonpark Limited and others v HMRC4 , the Court of Appeal considered an appeal against the Upper Tribunal’s (UT) decision that commission charges paid by dancers to lap dancing clubs for the provision and operation of a voucher scheme was a taxable supply for VAT purposes.


The Appellants operate table and lap dancing clubs in London. The clubs’ dancers were selfemployed and were paid directly by customers. While cash payments were accepted by the dancers, customers would occasionally run out of money. To mitigate this, the clubs had established a system whereby customers could purchase vouchers from them using credit or debit cards. The dancers would then encash the vouchers at the end of an evening, paying a commission of 20% on their face value.

The clubs had sought the repayment of VAT on the commission on the basis that it was an exempt supply within the Value Added Tax Act 1994, Schedule 9, Part II Group 5 Item 1: “The issue, transfer or receipt of, or any dealing with, money, any security for money or any note or order for the payment of money”. The parties were agreed that, unless the payments were exempt supplies falling within Group 5 Item 1, the commission would be subject to VAT at the standard rate.

HMRC had rejected the Appellants’ claim that the commission charges were exempt supplies and the FTT dismissed the clubs’ appeals against that determination. On appeal to the UT, which upheld the FTT’s decision, the UT found that the 20% commission payment charged by the clubs when dancers redeemed the vouchers was a payment in return for services going significantly beyond the simple “receipt of, or any dealing with, money” for the purposes of Group 5 Item 1.

The crucial point to be decided by the Court was whether the UT had been correct to decide that the provision of the clubs’ facilities (which enabled a dancer to obtain income from noncash customers) should be treated as part of the services supplied in return for the commission payable on encashment of vouchers. If this was not correct, it would follow that the supply was exempt and that VAT was not payable on the commission.

Court of Appeal’s decision

The Court focused on the precise supply or supplies being made by the Appellants rather than general descriptions of the commercial opportunities arising from the voucher scheme.

In the view of the Court, the present case could be distinguished from cases such as Kingfisher v HMRC [1989]5 , where the retailer, equivalent to the dancers in this case, traded from its own premises (and where supplies made were held to be exempt supplies under Group 5 Item 1). In the present case, the dancers traded at the clubs and not from their own premises.

The Court went on to examine the economic reality of the transactions which, in effect, was that both the clubs and the dancers were dependent on each other for success and profitability. The dancers could not provide their services in exchange for vouchers without the facilities provided by the clubs. For the dancers to be able to exploit the non-cash customer market, they needed not only the voucher scheme but also the clubs premises and facilities. In those circumstances, the Court concluded that the UT’s analysis that the provision of the clubs facilities formed part of the consideration for the commission on encashment of the vouchers, was a legitimate interpretation of the constituent parts of the services supplied by the clubs in return for the commission. It reflected the economic reality from the perspective of the dancers and the analysis was an evaluative judgment that a Court should be slow to overturn.

The appeal was therefore dismissed.


This decision provides useful guidance in this complex area and highlights the importance of determining precisely what is supplied for the consideration provided.

A copy of the decision can be found here.