Private dancer

The taxpayer company ran an adult entertainment club with a dance floor seating and bar on its upper level. There were six booths downstairs in which self-employed members of staff gave private dances to customers.

The dancers received tips performing on the dance floor and fees for private sessions. They paid a 25% fee on their earnings from private dances for the use of the club’s facilities.

The taxpayer said the commission represented payment for a VAT-exempt supply of land – but HMRC ruled that the payments were consideration for a supply of standard rated services from the club to the dancers.

The First-tier Tribunal concluded that the club made a single supply the dancers in return for commission. There were multiple elements to the supply – including heating and lighting – but they were not “economically divisible”.

On whether the supply was one of land the tribunal...