THOUSANDS of pounds of taxpayers' cash will have to be paid to sex shops after a bungle by Derby City Council.
The stores, Simply Pleasure and Private Shop, will get back more than £17,000 in total as a result of a licensing fees mistake.
Simply Pleasure, in London Road, and Private Shop, in Osmaston Road, will each get £8,775.
Store owners accused the council of unjustifiably hiking fees to milk the shops for as much money as possible.
It was also suggested high fees were imposed as a deterrent to their kind of business.
Tim Hemming, owner of Simply Pleasure, said: "They thought they could get away with it."
He asked how councils could charge sex shops hundreds of pounds more than zoos for licences.
Jonathan Isaby, TaxPayers' Alliance political director, said the council could not be allowed "to fleece perfectly legitimate businesses by charging over the odds for licences".
He said: "Circumstances are hard enough for businesses trying to make ends meet at the moment without having local authorities adding to their woes with erroneous bills.
"The cash being paid back to these shops is money that should never have been taken by the council in the first place."
In 2010-11, the council had charged £1,500 for a licence renewal for each shop and, in 2011-12 and 2012-13, £4,380.
But, following a key legal test case, it reduced that fee to £495.
Now officers say the council must pay back £3,885 to each shop for the past two financial years and £1,005 from the year before.
Councillor Frank Harwood, a member of the city council's general licensing committee, said the sums which will be paid to the sex shops were "money the council can ill afford".
Mr Harwood said the situation could have been worse as there was another sex shop in the city that went into liquidation and had cited financial problems – which could have included high licence fees – as a reason for its folding.
He said: "They went into liquidation so I don't think they could come back and demand any money."
Mike Wallace, a director of Darker Enterprises, which owns Private Shop, said the licence fee being paid for that store had been "out of sync" with other businesses in the city. He said: "I think councils came along when the shops first came out and thought they could make a bit of cash and charge high fees as a deterrent."
He said his firm had received a call from the city council confirming a payout of about £9,000 but that he would need to "look at the figures to check they are correct".
The payout in Derby comes after 15 authorities, led by Westminster City Council, which includes Soho – where there is a large sex shop industry – were successfully challenged in court for overcharging.
Mike Kay, the council's head of environmental health and licensing, said "a policy recommendation has been approved to repay what is owed".
He said the £17,550 total would come from "council funds".
When asked why the council had decided to charge the amounts that it did, he said: "A policy decision was made at the time which has subsequently been found to be incorrect."
