May 2014

Lap-dancing, land and VAT.

Published on: 23 May 2014

What’s the link between lap-dancing, land and VAT?

It’s an interesting question and one which a VAT tribunal has recently been considering.

old-ladyDancers at the Sugar & Spice club in the UK have to make payments to the club for the use of their facilities and the dancers earn their income directly from customers for dancing on the dance floor or private dancing in separate rooms.

The dancers pay the club a fee of £40 together with a commission of 25% on the fee they receive for private dances in the separate rooms.

When it came to completing their VAT return, the club argued that the fee of £40 charged to the dancers was a taxable supply (i.e. VAT would be charged) but the commission charged was for an exempt supply of land (i.e. they argued that the payment was for the provision of the room which they claimed was land and as a result VAT would not be charged).

Perhaps unsurprisingly, the tax authorities argued that the commission was a taxable supply and was in respect of services provided to the dancers such as advertising, music, heating and security. They argued that this amount should be liable to VAT at the standard rate.

A decision couldn’t be reached between the Sugar & Spice club and the tax authorities so the situation went to a VAT tribunal.

The tribunal concluded that it was more than a simple provision of land (i.e. because of the provision of advertising, security, etc) and as a result VAT would be chargeable on the total amount.

So there you go. The next time you happen to be in a lap dancing club you can ask the young lady in front of you whether she knew that the room she is dancing in involves a standard rated supply rather than an exempt supply…

This poster came in handy.

Published on: 20 May 2014

Although some of the less ethical students may be tempted, it’s never a good idea to cheat in your exams.

plymouth-university2

 

The time and energy spent in trying to devise a method of cheating would be far better spent by revising the key areas in the syllabus.

Plus of course, the professional exams are very well invigilated and as a result there is a high probability that anyone who does cheat will get caught and that doesn’t bode well for a long term career in that particular area.

Plymouth University decided to emphasise to their students that cheating was not a good idea. Unfortunately, their good intentions didn’t really work out as planned.

They prepared anti-cheating posters and put these on the walls of their exam rooms.

Reddit reader hazzaap123 who was a student sitting an exam at the University took the photo above and posted on Reddit that “Just took a maths final with this on the wall of the exam room. It has formulas on that were needed in the exam. The poster got me an extra 10% on the paper”.

Yes, the anti-cheating poster prepared by the University included a picture of a hand with a formula written on it and that formula was needed in the exam that was taking place…

Royal Navy seize inelastic items.

Published on: 10 May 2014

A joint operation by the British and Australian navies last month resulted in the largest ever haul of heroin at sea. The drugs weighing 1,032 kilogrammes had an estimated British street value of more than £140 million and were found on a boat 30 miles off the coast of East Africa near Kenya and Tanzania.

This is great news for the authorities but what link does this have with the exams?

HMS EdinburghPrice elasticity of demand (PED) is a core area of pricing theory. PED measures the sensitivity of customer demand to a change in prices and is calculated as

PED  =    % change in demand
% change in price

There is usually an inverse relationship: when price goes up, demand goes down (and vice versa).

Addictive drugs such as the heroin seized by the British and Australian navies however are an inelastic product and in fact are approaching perfect inelasticity. A perfectly inelastic product is a situation where price goes up but the quantity demanded stays the same. In the case of addictive drugs, the drug addicts will still need their “fix” so the quantity demanded by them is largely unaffected by price increases.

The ExP Group