A girl of five was hit with a £150 fine for setting up a homemade lemonade stand outside her home in east London.

Professor Andre Spicer said his daughter was left in tears and repeatedly asked "Have I done a bad thing?" after the incident.

She had offered homemade drinks for 50p to people on their way to the nearby Lovebox festival in Victoria Park.

But they were approached by workers for Tower Hamlets council who issued an on-the-spot penalty for trading without a licence.

The council has since cancelled the fine and apologised to the family.

Prof Spicer's daughter was selling drinks to people on their way to Lovebox festival. Credit: PA

Professor Spicer, who works on organisational behaviour at the Cass Business School, said his daughter had been inspired by a fair at her school and wanted to try out her own stall.

"We made up some homemade lemonade and then we went down to the end of the street, not far from where the Lovebox festival was going on," he told ITV News.

"People started buying lemonade - they were very happy and felt it was contributing to the community."

But after about half an hour, several enforcement officers came up and began reading lengthy legal notice before writing a fine.

Professor Spicer said his daughter had been left upset and afraid by the incident.

"I said maybe we can apply for the right permit and do it again at some stage, and she said ‘That’s a bit scary’," he added.

Tower Hamlets has apologised, saying officers should have used more common sense. Credit: AP

He said that the heavy-handed council's actions would stop children from exploring entrepreneurial ideas or expressing their creativity.

I think the wider issue here is a question about encouraging children to have a go at things, whether it’s starting a small business or putting on a play or whatever they want to do. Children are under a lot of pressure these days and are often not encouraged to take risks. Professor Andre Spicer

A Tower Hamlets Council spokesperson said: “We are very sorry that this has happened.

"We expect our enforcement officers to show common sense, and to use their powers sensibly. This clearly did not happen.

“The fine will be cancelled immediately and we have contacted Professor Spicer and his daughter to apologise.”