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Tax Taskforce to target ‘adult entertainers’

Don't be a target
Don't be a target for the taxman's taskforce

Unless you were really, really bored in the run up to Christmas you probably didn’t get round to reading the press release from HMRC announcing the launch of a special task force that is targeting adult entertainers and the owners of adult clubs.

The headline was evidently written by someone who couldn’t resist the idea of getting the word ‘stripped’ into a piece about adult clubs: Tax-dodging club owners to be stripped of profits. And it doesn’t sum up the content of the press release particularly well, because there’s more to it than just sex clubs.

Adult club owners and adult entertainers who don’t pay their taxes are being targeted by a new UK-wide taskforce launched today by HM Revenue and Customs (HMRC).

The rise of the internet has caused a drastic increase in online escort agencies and HMRC estimated in 2010 that the adult entertainment industry could be worth up to £5 billion.

For the first time in this sector, the taskforce will target the traders and entertainers, some of whom earn thousands of pounds a day, working in this industry. Those who continue to operate in the hidden economy and not register with HMRC for VAT, Income Tax and PAYE are being targeted.

Jim Stevenson, Head of HMRC Taskforces, said:

“Large numbers of people working in this industry are paying the tax they owe and they don’t have anything to worry about. The people being targeted by this taskforce have no intention of playing by the rules, and we won’t tolerate this.

“No industry is safe where tax evasion is concerned – we won’t stop tracking people down and taking back what they owe.”

More than 140 taskforces have been launched since 2011 collecting more than £404 million that goes towards funding vital public services. This includes £109 million brought in during the first six months of this financial year.

HMRC 4 December 2015

There are a few points to pick out from this, and from the accompanying notes.

HMRC sets up around 30 taskforces each year to focus on specific areas where they believe there is a high risk of tax fraud and significant amounts of tax that’s not being paid. They’ve targeted a wide spectrum of different activities from plumbers to doctors and dentists, and from mobile hairdressers to residents of Northern Ireland with ‘hidden wealth’. These taskforces bring together specialists from across various units for what they describe as ‘intensive bursts of activity.’

The Revenue acknowledge that many people in the adult sector already pay their tax. This is not aimed at them. The taskforce is targeting those who don’t pay tax, and have no intention of doing so: fraudsters rather than the careless.

Anyone caught by a taskforce is more likely to face prosecution than someone who is already registered and paying tax, but who as a result of a normal enquiry into their tax return ends up having to pay additional tax plus interest and possibly penalties.

Once again we see the size of the adult sector being estimated at £5bn. Presumably this is based on the widely discredited calculations made by the Office of National Statistics, which I’ve written about previously. In any case HMRC seem to be using a rather different definition because they are including clubs, whereas the ONS figures were based solely on individual workers.

The press release also talks about some entertainers earning thousands of pounds per day. The suggestion seems to be that for some this is a typical average day’s income, which if true would mean an annual income of more than £250,000. I doubt very much that there a more than a handful of individual sex workers earning at that level.

But there may well be agency owners making that much, and more. The notes to the press release refer to a recent criminal case in which Janine Adeleke, a 43 year old mother of 5, was jailed for 3 years for tax and benefit fraud. She was evidently claiming Income Support, Housing Benefit, Tax Credits and Carers Allowance while running Carltons a high-class escort agency from which she earned £650,000. Investigators became suspicious when they discovered she had spent over £120,000 on private schools for her children.

So, if you haven’t declared your income now might be a good time to do so. If you need an accountant to help you, there are some here: Accountants4escorts. With their help you might get a better settlement than you expect and it’s got to be preferable to the risk of being caught and spending next Christmas behind bars.

 

 

 

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