Every so often a story does the rounds of an escort who has been landed with a colossal tax assessment which grossly overestimates her earnings, leaving her faced with the seemingly impossible choices of either paying a vast sum of money in tax or attempting to prove that the taxman has got his calculations wrong.
A typical example goes something like this. Taxman apparently says to escort: you charge £100 per hour and I think you work a 40 hour week, so that’s £200,000 per year and £1.2M over the last 6 years. You don’t have any evidence of expenses so we want tax on the lot. That’s £375,000 in tax plus interest of £60,000 and 100% penalties for fraud of another £375,000, plus VAT of £180,000. Here’s a bill for £990,000. You have 30 days to pay.
Undoubtedly this scenario could happen. But it’s not difficult to avoid and for an escort to find herself in this situation she would need to have passed up several opportunities, over a period of years, to get her tax affairs in order.
Most escorts are in business primarily to make money. So the kind of head-in-the-sand mentality that can get you into this sort of mess is right up there alongside offering bareback because you imagine you have natural immunity to sexually transmitted infections. Life ain’t fair, and only a fool would take unprotected risks with their health or their wealth, but you can significantly alter the odds in your favour with a few simple precautions.
And if you do nothing else you could start by investing £17.20 in a book-keeping system that will at least mean that when the taxman’s brown envelope lands on your mat you have some basis for demonstrating what you’ve actually earned.
In this section we’ll look at what can go wrong, how the tax authorities deal with tax investigations, and what you can do to protect yourself.