The Whiplash cases

The tax problems of Lindi St Clair (Marian Akin a.k.a. Miss Whiplash) started when she refused a discount to a cross-dressing tax inspector.

By then, as a result of police raids, she already had two convictions for brothel-keeping. During the second raid all the girls escaped out of the back door leaving the Vice Squad to discover 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. On both occasions the police had urged her to plead guilty, pay the fines and look on it as just like paying tax. So when the Inland Revenue started taking an interest in her she ignored their forms and simply wrote back asking “if brothel-keeping is to be recognised and taxed, then will my brothel convictions be quashed and my fines refunded?”

When she eventually went to court her attempt to pursue the argument that brothel keeping could not be taxed because it is illegal was fatally scuppered by what happened next. The Revenue wrote demanding an affadavit detailing her business affairs – not that they have any legal right to require an affadavit. And then, by a huge coincidence, she was called by a tax officer who offered to help her complete the affadavit in return for sex. He duly arrived, with a copy of her Revenue file (and with severe body odour) and advised her to tell the Revenue that her earnings were from prostitution and not to admit to brothel-keeping because that would amount to signing a confession to a criminal offence for which she already had two convictions and was risking a prison sentence if she was convicted again.

In the meantime she’d been ripped off by a so-called tax consultant who apparently charged her for 10 hours work at £200 per hour – this was 1977! By way of comparison KPMG were charging me out at £3.80 per hour in 1978.

R v Registrar of Companies, ex parte Attorney General

By 1979 Lindi had appointed a proper firm of Certified Accountants to act for her and they recommended forming a limited company as a way of saving tax. On 16 August 1979 they wrote to the Registrar of Companies saying that the Inland Revenue Policy Division had informed them that they considered prostitution to be a fully taxable trade. As there seemed no good reason why her activities could not be carried on through a limited company they asked if the name “Prostitute Limited” was available for registration.

The Registrar didn’t like that name. Nor would he accept “Hookers Ltd.” So she offered him a choice between “Lindi St Claire (French Lessons) Ltd” or “Lindi St Claire (Personal Services) Ltd” and the latter name was registered on 18 December 1979. In the memorandum of association the main object of the company was stated as “to carry on the business of prostitution.” The sole director of the company was Lindi St Claire, who gave her business occupation as “Prostitute.” Incidentally, Lindi later shortened her name to St Clair after a punter pointed out that St Claire is an anagram of clit arse.

The following year the Attorney General applied to the High Court for the registration to be quashed on the basis that the Registrar of Companies had exceeded his powers in registering a company which was not formed for a lawful purpose.

Sadly, Lindi did not appear in court, nor was she represented, but before the case was heard she wrote to the court:

I would like to say that prostitution is not at all unlawful, as you have stated, and I feel it is most unfair of you to take this view, especially when I am paying income tax on my earnings from prostitution to the government Inland Revenue.

Furthermore, I feel it is most unfair of you to imply that I have acted wrongly, as I was most explicit to all concerned about the sole trade of the company to be that of prostitution and nothing more. If my company should not be deemed valid, then it should have not been granted in the first place by the Board of Trade. It is most unfair of the government to allow me to go ahead with my company one moment, then quash it the next.

The High Court quashed the registration. Section 1 of the Companies Act 1948 allowed any two or more persons associated for any lawful purpose to form a company, and in his judgement the judge said:

It is well settled that a contract which is made upon a sexually immoral consideration or for a sexually immoral purpose is against public policy and is illegal and unenforceable. The fact that it does not involve or may not involve the commission of a criminal offence in no way prevents the contract being illegal, being against public policy and therefore being unenforceable. Here, as the documents clearly indicate, the association is for the purpose of carrying on a trade which involves illegal contracts because the purpose is a sexually immoral purpose and as such against public policy.

…if that is the position, as indeed it clearly is on the authorities, then the association of the two or more persons cannot be for ‘any lawful purpose’.

In a couple of important respects company law has changed since this case was decided. It is no longer necessary for a company to spell out its precise objects in the memorandum of association and it is now possible for a company to be formed with just one shareholder who can also be the sole director.

So would it be possible now for an escort to legitimately run her business through a limited company? Lindi St Clair stated in the public documents filed at Companies House that her company was formed to carry on prostitution, and she had a second shareholder (a Miss Duggan) who might now have faced a charge of controlling prostitution; but a prostitute setting up a company today would need to do neither of these things. However the fact that the company was carrying on the business of prostitution would presumably become clear once it started operating, at which point it might risk being struck off by the Registrar of Companies.

In my view it’s not a risk worth taking because if a company is struck off all its assets are forfeited to the Crown – unless its registered office is in Cornwall in which case the company assets go to the Duchy of Cornwall, a trust whose sole purpose is to subsidise the lifestyle of the Prince of Wales.

I can also see scope for horrendous legal arguments about the legality of dividends paid by a company out of profits earned from illegal contracts.

The tax cases

By 1981 the Inland Revenue had issued estimated tax assessments for the 8 tax years 1973/4 to 1980/81. The total tax charged was over £110,000 – a huge figure that was probably influenced by a 1980 ITV documentary in which she was filmed in her Jag travelling to a Mayfair jewellers to buy diamonds with her credit card. Her accountant appealed and negotiated a reduction to £46,000, which was quite an achievement since she had no accounting records. As Lindi thought this was still too high it was arranged that the Inland Revenue Special Office would send two inspectors to see how she ran her business.

She made sure they saw everything. The interview was conducted with Lindi topless – she is a large lady, and at one stage, partly thanks to an addiction to hula hoops, reached 64KK. She was accompanied throughout the meeting by three girls in black leather fetishwear and another stark naked. As well as telling the tax inspectors about her business  and giving them a guided tour of her “House of Fetish and Fantasy” she took the opportunity to ask them whether a prostitute could claim tax relief for haemorrhoid cream, or for the cost of having a tonsillectomy to improve her oral technique. An excellent question which has yet to receive a definitive answer.

In November 1981 agreement was reached with the Inland Revenue. The outstanding tax was agreed at £40,000 (plus interest for late payment) and the appeals were settled (under S54 TMA 1970.)

That should have been the end of the matter.

But Lindi didn’t pay up and after 5 years the Inland Revenue sued her for payment of the debt which, with interest, had now increased to £58,751. She wrote to the Court pointing out that if the Revenue were to recover tax on her income then the Crown would be guilty of living on immoral earnings. The judge decided she had an arguable case and refused to give judgement for the Revenue.

They appealed to the High Court.

Inland Revenue Commissioners v Aken (1987)

Outside the court a group of Lindi’s supporters demonstrated with placards and chants of “The State is a Pimp.”  Her barrister employed the more sophisticated argument that the Revenue had acted beyond their powers in raising tax assessment on income from prostitution and therefore the agreement which had settled her appeals against the original assessments was invalid. The Taxes Acts charge income tax on the profits from any trade, profession or vocation. The word “trade” is not defined other than “trade includes every trade, manufacture, adventure or concern in the nature of trade.” Lindi’s barrister argued that although prostitution is lawful it cannot be considered a trade because a prostitute cannot do many of the things that mark out an ordinary trade such as advertise, go into partnership, form a limited company, employ people, rent premises and sue for her debts. It was also argued that managing a brothel could not be a taxable trade because it is illegal.

Lindi St Clair lost. Quoting several leading cases the judge decided that if an activity is organised as a trade it is taxable even if it is basically legal but tainted with illegality (e.g. running a business whisky exporting business in a way which evaded customs duty) or even if it is wholly illegal (street betting or brothel keeping.)

His judgement includes this:

The reason why … profits of burglary are not taxable is not because burglary is illegal but because burglary is not a trade. Conversely, if the activity is a trade, it is irrelevant for tax purposes that it is illegal.

Lindi decided to appeal.

The Corrective Party

In the meantime Lindi made almost a dozen attempts to get elected as an MP in by-elections all around the country.  Despite a conspicuous lack of success her fringe party’s policies now sound remarkably reasonable and even tame.  In her last campaign, the Newbury by-election in May 1993, her manifesto included:

Our concerns are Social Justice, Civil Liberties, Animal Rights and Sexual Freedom.  We campaign for wider legal aid availability; police accountability; better consumer redress; wider adoption availability; tax deductable child minders; declaration of MP’s inland and overseas business interests; secret ballots without numbered counterfoils; Freedom of Information; Proportional Representation; ban vivisection, blood sports and battery farming; proper anaesthetics given before animal slaughter; phase out animal products; outlaw homophobia, abolish clause 28 and clause 25; pre-puberty sex education on the National Curriculum; children’s ombudsperson to avoid abuse; legalize commercial surrogate motherhood. Our pet policy is to legalize brothels. Years of research within the vice world have allowed us to publish an informative report on all aspects of sexual services. As a fund raiser we sell this exclusive detailed report for £30. We also sell a cleverly designed ‘Breaking the Chains of Sexual Repression’ Corrective party T-shirt. (Large size only: Pink – our colour – only).

Perhaps sadly, bankruptcy prevented her from being a candidate in Eastleigh the following year. Her party’s views might have added something to a by-election campaign which had been triggered by the death of the Conservative Stephen Milligan whose body was found dressed only in stockings and suspenders, a bin bag over his head, an orange segment in his mouth and an electric cord around his neck. He was presumed to have accidently died from autoerotic asphyxiation.

Inland Revenue Commissioners v Aken – Court of Appeal 1990

According to Lindi’s autobiography she appeared before the three 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.”

It didn’t help. She lost comprehensively.

The judges decided that prostitution is a trade.

It 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 either at common law or by statute and made subject to either civil or criminal sanctions. Both bargains and services are immoral, but that is all.

The Appeal Court judges did not disagree with the High Court judgement that illegal trades are still taxable, but they said the question was irrelevant. Although Lindi was convicted of brothel-keeping in 1973 and 1976 there was no evidence of her earnings from this illegal activity, and (thanks to the affadavit she had signed years earlier) the tax assessments were on her income from prostitution. which is a legal activity.

On the question of the unfairness of taxing a business which could not legally advertise, or form a company or employ staff, the court was not swayed:

… if a plumber chooses to ply his trade without doing any of those things which would constitute crimes if done by a prostitute, he is plainly still carrying on a trade.

The Aftermath

The Court of Appeal refused leave for an appeal to the House of Lords, and in July 1990 the House of Lords Appeal Committee refused to hear her appeal.

By 1992 the interest on Lindi’s tax debt had taken the total up to £200,000 and the Revenue Enforcement Department were threatening to bankrupt her.

In January 1993 Lindi St Clair’s car was found abandoned at the top of Beachy Head. After a frenzied search orchestrated by the tabloid press she eventually turned up off the coast of Florida enjoying a cruise on the SS Canberra.

Epilogue

Marian Akin now lives in rural Herefordshire where she breeds ducks and sells free range eggs.

In February 2009 her jeep left a remote Herefordshire road, slid down a steep embankment and trapped her upside down in a stream for 22 hours before she was rescued. She later told the BBC that the experience had led her to finding God. She was confirmed in the Church of England by the Bishop of Hereford in November 2009.

 

Acknowledgements

The main sources for this section are the reports from the court cases and Lindi St Clair’s autobiography “It’s Only a Game” published in 1991 by Judy Piatkis (Publishers) Ltd, and republished by Pan Books in 1992 as “Miss Whiplash – My Sensational Life Story.” Sadly Lindi’s book is out of print but second-hand copies are available on Amazon.

Marian Akin is the copyright holder of the pictures on this page. They are used under the Creative Commons Attribution-Share Alike 3.0 Unported license.

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