Am I in business?
The Revenue’s Business Income Manual talks about the activities of a prostitute being taxable if they are “organised in such a way as to constitute a trade or profession.”
There is no single definition of what constitutes trading but the following ‘badges of trade’ would indicate that an escort is in business and therefore liable to income tax:
- An intention to make money.
- Transactions which are systematic and repeated – for example having a web site which sets out how you work, what you charge and what you provide, indicates that you are trading.
- A method of sale which is typical of trading transactions – advertising, talking to potential customers, giving a quote for the services required, taking a booking, receiving the fee and finally doing the deed are all typical of trading transactions.
- The existence of similar trading transactions – do other people in business provide similar services in a similar way? Read more
Is it taxable?
Yup, I’m afraid so. Whether you are being paid for your time and companionship, to give a massage, for sexual services, or simply to tie a naked businessman to your coal bunker with the clothes line and thrash his buttocks with wet stinging nettles, the income is taxable. There is absolutely no doubt about that, I’m afraid.
If you go onto the HM Revenue & Customs web site and type the word “prostitution” into the search box you will quickly find this:
If the activities of a prostitute or any other person deriving income from prostitution are organised in such a way as to constitute a trade or profession, the profits are liable to income tax. This was confirmed by the ‘Miss Whiplash’ case, CIR v Aken [1990] 63TC395.