Secrets v HMRC

In Secrets v HMRC (TC03255 – 23 January 2014) the issue was the correct treatment of transactions involving ‘Secrets money’; vouchers issued by the Secrets companies which enabled patrons to continue spending money in lap dancing clubs when they had run out of cash. The Secret companies charged 20% commission on issue of the vouchers to patrons and again on redemption of the vouchers by the dancers. It was accepted that the supply of the vouchers to the patrons was a taxable supply. The question was the VAT treatment of the commission charged to dancers.

Secret companies had no right to any part of a dancer’s earnings and derived their income from entrance fees from both dancers and patrons cloakroom charges the sale of drinks and food and commissions on Secrets money.

Relying on the statutory words ‘without gloss’ the tribunal found that...