Westminster City Council lose sex licence fee appeal

In a judgement predicted to have a huge impact on the funding of regulation, Westminster City Council has lost its appeal against an earlier High Court decision ruling that its licensing fees for sex shops were unlawful.


Westminster has charged owners of licensed sex shops £29,102 since 2005, attributing some of the income to clamp down on illegal shops.  


In December 2009 the Provision of Services Regulations 2009 came into effect.  Regulation 18(4) states that any charges provided for by a competent authority which applicants may incur under an authorisation scheme must be reasonable and proportionate to the cost of the procedures and formalities under the scheme and must not exceed the cost of those procedures and formalities.


Several licensed sex shop owners challenged Westminster Council, arguing that the Council’s sex licensing fees were excessively high and in May 2012 Mr Justice Keith ruled in the High Court in favour of the sex shop owners.


The Council appealed to the Court of Appeal, arguing that its fees were unaffected by the new laws.  


Today however the Court of Appeal upheld the High Court’s ruling.



The Council has also been ordered to:


  • recalculate fees as far back as 2004 after deficiencies were found in its procedures for determining them;

  • repay the vast majority of fees from the beginning of 2010.

  • pay interest at 10% above the Bank of England base rate;

  • pay indemnity costs after it rejected an offer to settle on better terms at the start of proceedings.


The financial impact on the Council of the Court order is believed to be in the region of £2m.


Philip Kolvin QC said: “The judgment has important consequences for the funding of regulation in the UK because the new laws apply to all forms of authorisation to provide service activities. These include all forms of licensing (except for gambling and taxis which are excluded), street trading, subscriptions payable by professions including the legal professions in order to be able to practise and even the fees for planning applications.


“Most importantly, the judgment will limit the scope of fees which licensing authorities will be able to charge under the Licensing Act 2003, following the right to determine fees introduced by the Police Reform and Social Responsibility Act 2011. The Home Office has delayed introducing Regulations implementing the legislation, it is thought in order to enable it to consider the Hemming judgment.”

Cllr Nickie Aiken, Westminster City Council’s cabinet member for Public Protection and Premises, said “This is not what we wanted, this is not what the Government wanted and it is not what the taxpayer will want. Soho's reputation and central location means Westminster has more sex shops than anywhere in the country. It is a unique problem, totally unlike any other area in the UK. And clamping down on the unlicensed shops costs a lot of officer time and money.  This ruling, using EU law, will open the floodgates for illegal sex shops and we will no longer have the resources to deal with them.”