Westminster City Council has been ordered to repay £1m in fees collected from Soho sex shops, in a legal ruling which could have 'massive implications' for licensing authorities around the country.

A written judgement issued last week by the Court of Appeal found Westminster's policy of charging licensees on a self-funding 'polluter pays' basis breached European Union law.Prior to the 2009 Provision of Services Regulations, councils were allowed to recover reasonable enforcement costs under the 1982 Local Government Act.