It isn’t often that hair salons find themselves amongst reported cases in the Royal Courts of Justice, but when they do it tends to be industry-shaking issues! So what is the issue on chair rental? After all, a survey in 2004 indicated that there were more than 100,000 self-employed hairdressers in the UK. Julian Sampson explains…

The problem with chair rental is the tax man. The issue of chair rental and the charge to VAT in circumstances was brought to the Courts by a London salon called Michael Jane in June 2007. 

The two arguments that existed in favour of salons were that a letting or licence of a chair space (or any other space such as a room or floor) might be a VAT exemption under the law and the entire charge would be exempt, and even if the facilities offered were VAT-able then the cost attributable to the remaining space could be divided from the gross cost and deducted.
The Court found against Michael Jane and I have paraphrased some of the judgment below as this gives a good précis of how the salon was operating in practice.

The Court stated:
"...there were chairs in the basement for each stylist. There was a client waiting area in that separate room with its own chairs. In 1996 there were three self-employed stylists. A sign on the door to this separate room in the basement stated that the room was for the use of independent contractors. On each mirror there was a sign stating that each stylist's chair was for the sole use of a designated stylist. Each of the three stylists share the use of the washbasins and the dye-mixing room. The self-employed stylists shared [a junior assistant], and the same appointment book and till as the rest of the staff. The stylist who has rented the chair cannot carry on her business from her "floor space area" alone; she has, for example, to go and meet her client, to take her client to the washbasins and she has to go to the dye-mixing area. They have to move around the premises "to do their jobs".