Services rendered

The appellant company ran a sauna. It also provided other services including massage. Self-employed hostesses were allowed to run their businesses from the premises.

Clients would be charged an entrance fee which entitled them to a specified amount of time to use the facilities.

The hostesses charged separate fees for any additional services which the client paid direct to her.

It was agreed that any money received privately by the hostess belonged to the hostess alone.

However the entry fee was in dispute. Of the fee paid the appellant took £5 and the hostess was entitled to half of the balance with the appellant taking the other half for rent and facilities.

Clients were unaware of the contract. The appellant paid VAT on the £5 and the balance but the tribunal said that the appellant should pay VAT on the whole amount.

The Court...