The taxman vs the prostitutes

Prostitutes have to pay tax on their earnings, so why isn't their business entitled to same protections as everyone else?

This week’s news regarding Donna Asutaits, who was jailed after earning more than £300,000 in two years and failing to declare tax, is a reminder that prostitution is taxable. Well, more taxable than Goldman Sachs or Vodafone, at least.

The story of how the trade came onto HM Revenue and Customs’ somewhat hit-and-miss radar gives an interesting little insight into its relationship with the state. I decided to talk to a man who could tell me more. While he doesn’t want to give his name, he goes by the online moniker of Jolyon K Jolyon (he’s a fan of The Forsyte Saga), and he’s now a retiree, living in the West Country.

Some years ago, he was running an accountancy practice. He found himself acting for a lady who told him she was a dental technician, but the more he looked into her records, the less they stacked up. Why, for example, was she always paid in cash? He held a meeting with her, and she admitted she was a prostitute. Undaunted, he decided to continue working for her, and soon she introduced him to more women working in the same industry.

Jolyon is rather knowledgeable on the history of this issue. He tells me it was resolved back in the 1980s, when the famous madam Lindi St Clair underwent a series of investigations after she refused a discount to a cross-dressing tax inspector. Jolyon’s website tells the story in full, but a précis runs thus. 

After the first investigation Lindi appointed a proper firm of Certified Accountants to act for her, and they recommended forming a limited company as a way of saving tax. The following year the Attorney General successfully applied to the High Court for the registration to be quashed. A series of legal battles were then waged between St Clair and the Revenue, in which she drew attention to what she felt was the hypocrisy of the state.

You could argue she had a point. During one police raid, the Vice Squad discovered Lindi sitting quietly in the lounge, with a vicar in a gas mask handcuffed to a wall, a straitjacketed member of the House of Lords shut up in a cupboard and an MP chained up to a dog kennel in the garden. At one point she appeared before the Appeal Court judges dressed in fish net tights, a low-cut shiny PVC dress, and a steel-studded belt from which handcuffs dangled: “I felt that if I were to be taxed as a tart, I would appear as one.”

Lindi’s barrister argued that although prostitution is lawful it can’t be considered a trade because a prostitute cannot do things such as advertise, go into partnership, form a limited company, employ people, rent premises or sue for debts. She lost the case and her subsequent appeal at the Court of Appeal. The judges said: "[Prostitution] consists in the supply of services for reward on a commercial basis. Although the bargains made between the prostitute and her clients are unenforceable as being contra bonos mores neither the bargains made nor the services supplied are illegal in the sense of being prohibited…" In English – what you’re doing isn’t illegal even if everything surrounding it is, so pay up.

The case is cited by HMRC as the judgement that confirms prostitution is taxable. “But even today, there’s a huge misconception about what the law is,” says Jolyon. He feels that the big problem lies with the legislation on brothel keeping. This – unlike prostitution, is considered a crime. Common sense dictates two fairly simple things: one, prostitution won’t go away any time soon (something about that whole "oldest profession" thing), and two; the women doing it are safer working indoors with a maid, rather than working on the street.

There’s neither rhyme nor reason to this law, besides the rule that for every outraged Daily Mail headline there’s an equally cowardly political reaction. This could be seen in action a few years ago, when Labour announced it was looking into allowing small groups of women to work together, the Mail newsdesk editors had to be mopped down with a moist towelette, and the idea was quietly junked.

The common argument against is that there’s an epidemic of trafficking which requires the police to clamp down on brothels as and when they choose. The problem is, the last time an MP tried to cite data to support it, it turned out they were drawing on statistics drawn up by that well-respected institute of independent research, the Daily Mirror (as a side note, it's never a good idea to cite this as a source in Parliament and then go on Newsnight, on the off-chance Jeremy Paxman rips you a new one - see below).

Jolyon says: "The women for whom I worked simply made a hard decision and did the work with their eyes open. If people are paying taxes on their business they should be entitled to the same protection as anyone else. There are already laws to protect from trafficking and slave labour – what makes the sex industry different?”

I tell Jolyon I know of one case where the officers who closed down a brothel had, for a period prior to the closure, been making use of its services – and have described another case at length, where the police’s behaviour could best be seen as reprehensible. It’s an inconvenient truth that the cops get a share of the frozen assets when they close a brothel down.

Jolyon tells me the authorities make it impossible for brothels to function above ground: “Accountants are part of the regulated sector – they’re bound by money laundering regulations, so if they come across a brothel they’re obliged to tell the Serious Organised Crime Agency, and can’t tell the client that that’s what they’ve done. Similarly, no accountant wants to take on a client which at any time could be closed down under the Proceeds of Crime Act. That’s why I only worked for women working on their own.”

As I wrote last month, the authorities have been quietly trying to “clean up” the Olympic boroughs. In that case it was a police-lead exercise – but Jolyon tells me about another operation I hadn’t noticed. According to a press release Operation Vermont, was “a multi-agency exercise which ran for six weeks in May and June. During this time 31 businesses were suspected to be underpaying workers, or were considered a significant risk requiring further HMRC investigation.”

Jolyon concludes: “It’s interesting that they targeted things like fast food outlets and mini cab offices, rather than brothels – you’d think they’d be the first port of call, if the industry is as sordid as they make out.” Donna Asutaits claimed in her defence that she was simply naive in not paying tax. One might raise an eyebrow at the idea she could earn so much money and assume it wasn’t taxable. But given the long-standing stigma that has emanated from government on this issue, she might well have been telling the truth.

 

A Soho prostitute waits for some custom. Photograph: Getty Images

Alan White's work has appeared in the Observer, Times, Private Eye, The National and the TLS. As John Heale, he is the author of One Blood: Inside Britain's Gang Culture.

Getty
Show Hide image

In the 1980s, I went to a rally where Labour Party speakers shared the stage with men in balaclavas

The links between the Labour left and Irish republicanism are worth investigating.

A spat between Jeremy Corbyn’s henchfolk and Conor McGinn, the MP for St Helens North, caught my ear the other evening. McGinn was a guest on BBC Radio 4’s Westminster Hour, and he obligingly revisited the brouhaha for the listeners at home. Apparently, following an interview in May, in which McGinn called for Corbyn to “reach out beyond his comfort zone”, he was first threatened obliquely with the sack, then asked for a retraction (which he refused to give) and finally learned – from someone in the whips’ office – that his party leader was considering phoning up McGinn’s father to whip the errant whipper-in into line. On the programme, McGinn said: “The modus operandi that he [Corbyn] and the people around him were trying to do [sic], involving my family, was to isolate and ostracise me from them and from the community I am very proud to come from – which is an Irish nationalist community in south Armagh.”

Needless to say, the Labour leader’s office has continued to deny any such thing, but while we may nurture some suspicions about his behaviour, McGinn was also indulging in a little airbrushing when he described south Armagh as an “Irish ­nationalist community”. In the most recent elections, Newry and Armagh returned three Sinn Fein members to the Northern Ireland Assembly (as against one Social Democratic and Labour Party member) and one Sinn Fein MP to Westminster. When I last looked, Sinn Fein was still a republican, rather than a nationalist, party – something that McGinn should only be too well aware of, as the paternal hand that was putatively to have been lain on him belongs to Pat McGinn, the former Sinn Fein mayor of Newry and Armagh.

According to the Irish News, a “close friend” of the McGinns poured this cold water on the mini-conflagration: “Anybody who knows the McGinn family knows that Pat is very proud of Conor and that they remain very close.” The friend went on to opine: “He [Pat McGinn] found the whole notion of Corbyn phoning him totally ridiculous – as if Pat is going to criticise his son to save Jeremy Corbyn’s face. They would laugh about it were it not so sinister.”

“Sinister” does seem the mot juste. McGinn, Jr grew up in Bessbrook during the Troubles. I visited the village in the early 1990s on assignment. The skies were full of the chattering of British army Chinooks, and there were fake road signs in the hedgerows bearing pictograms of rifles and captioned: “Sniper at work”. South Armagh had been known for years as “bandit country”. There were army watchtowers standing sentinel in the dinky, green fields and checkpoints everywhere, manned by some of the thousands of the troops who had been deployed to fight what was, in effect, a low-level counter-insurgency war. Nationalist community, my foot.

What lies beneath the Corbyn-McGinn spat is the queered problematics of the ­relationship between the far left wing of the Labour Party and physical-force Irish republicanism. I also recall, during the hunger strikes of the early 1980s, going to a “Smash the H-Blocks” rally in Kilburn, north London, at which Labour Party speakers shared the stage with representatives from Sinn Fein, some of whom wore balaclavas and dark glasses to evade the telephoto lenses of the Met’s anti-terrorist squad.

The shape-shifting relationship between the “political wing” of the IRA and the men with sniper rifles in the south Armagh bocage was always of the essence of the conflict, allowing both sides a convenient fiction around which to posture publicly and privately negotiate. In choosing to appear on platforms with people who might or might not be terrorists, Labour leftists also sprinkled a little of their stardust on themselves: the “stardust” being the implication that they, too, under the right circumstances, might be capable of violence in pursuit of their political ends.

On the far right of British politics, Her Majesty’s Government and its apparatus are referred to derisively as “state”. There were various attempts in the 1970s and 1980s by far-right groupuscules to link up with the Ulster Freedom Fighters and other loyalist paramilitary organisations in their battle against “state”. All foundered on the obvious incompetence of the fascists. The situation on the far left was different. The socialist credentials of Sinn Fein/IRA were too threadbare for genuine expressions of solidarity, but there was a sort of tacit confidence-and-supply arrangement between these factions. The Labour far left provided the republicans with the confidence that, should an appropriately radical government be elected to Westminster, “state” would withdraw from Northern Ireland. What the republicans did for the mainland militants was to cloak them in their penumbra of darkness: without needing to call down on themselves the armed might of “state”, they could imply that they were willing to take it on, should the opportunity arise.

I don’t for a second believe that Corbyn was summoning up these ghosts of the insurrectionary dead when he either did or did not threaten to phone McGinn, Sr. But his supporters need to ask themselves what they’re getting into. Their leader, if he was to have remained true to the positions that he has espoused over many years, should have refused to sit as privy counsellor upon assuming his party office, and refused all the other mummery associated with the monarchical “state”. That he didn’t do so was surely a strategic decision. Such a position would make him utterly unelectable.

The snipers may not be at work in south Armagh just now – but there are rifles out there that could yet be dug up. I wouldn’t be surprised if some in Sinn Fein knew where they are, but one thing’s for certain: Corbyn hasn’t got a clue, bloody or otherwise. 

Will Self is an author and journalist. His books include Umbrella, Shark, The Book of Dave and The Butt. He writes the Madness of Crowds and Real Meals columns for the New Statesman.

This article first appeared in the 25 August 2016 issue of the New Statesman, Cameron: the legacy of a loser