Call girl jailed for tax evasion

A £1,000-a-night escort has been jailed for 16 months for tax evasion after she cheated HMRC out of tens of thousands of pounds.

Donna Asutaits, a 29 year-old self-employed escort earned more than £300,000 in two years, which allowed her to study for a master's degree and put down a £110,000 cash deposit on a £360,000 apartment in Knightsbridge. The £110,000 appears to be the same amount relating to a separate charge of money laundering, which Asutaits denies.

In an eerie replay of the notorious ‘Belle du Jour’ blog, Asutaits used her earnings in part to fund her academic career. Southwark Crown Court heard she started working as a prostitute to fund a master's degree at the University of Westminster.

Continued...

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Comments

Why is she jailed but the guy    8 thanks

The Limey | | Permalink

Why is she jailed but the guy who squirrled money in a swiss bank account only fined? This does sound like double standards to me.

Time for change's picture

Couldn't agree more    9 thanks

Time for change | | Permalink

A wealthy property developer, who closed a Swiss bank account in an attempt to avoid detection, has pleaded guilty and been ordered to pay fines and compensation totalling £830,000.

Wealthy -can't imagine Bob (rough) Diamond doing time either can you?

Whilst I'm not condoning the tax evasion, you have to admire someone, who goes through what this lady has and funded (Master's degree), hopefully, a passage to a better life.

Britain stinks for me, at the moment.

  David Winch may be able to    1 thanks

ireallyshouldkn... | | Permalink

  David Winch may be able to tell us the difference but my understanding is that the dodgy property developer paid some tax, but following a tax investigation (you have to sign the bit that say you are not hiding anything else) they found out he was stashing some more offshore, hence the nearly 100% penalty.

This lady declared not a bean to HMRC which I think is a much more serious offence than declaring only part of your income.

This case highlights the absurdity of this whole area in that was is a borderline legal/illegal activity is taxable. Its hardly surprising that some dont pay the tax due.  Its the same as drugs, if its not legal its pretty hard to tax it!

If I ruled the world it would all be legal, but all be taxed and regulated to protect everyone invovled and leave morals for the suppliers and customers not the state.

 

 

Morals and Tax    3 thanks

mikefleming3028 | | Permalink

The juxtaposition of the recent public expression of moral outrage by the PM at the antics of Mr Carr with the procecution of this "hard working" young woman could stand some serious examination. It seems that HMRC are more than happy to impose tax on immoral earnings indeed going so far as to not only tax but also invoke the Proceeds of Crime Legislation to hoover up what ever is left after interest and penalties. She now faces a 16 mth sentence and who are we to second guess the powers that be in such matters. However we are entitled to expect a level playing field in regard to the application of the law no matter how high up the tree you have climbed in life. From my take on the Bob Diamond / Barclays affair the enquiry seems to be leaning towards a fraud investigation, fraud is a crime and so is within the Proceeds of Crime Legislation. If found guilty who at Barclays will be charged and serve a custodial sentence? will the proceeds of crime be invoked with the same vigour for the  Barclays if fraud is proved? Can you imagine the size of the sums involved and the amount of any Confiscation Order. If the same principles are applied and the amounts involved inform any sentence then Barclays could be out of business and a lot of senior people could be eating porridge for avery, very long time.      

davidwinch's picture

Let the punishment fit the crime

davidwinch | | Permalink

It is difficult to comment on fines / imprisonment / confiscation meted out in particular cases without knowing the full facts.

The sentence is likely to reflect the judge's understanding of the complete picture of the criminality in which the convicted defendant has been involved.  So, for example, a person who fails to declare income from a legitimate business may receive a less severe penalty than a person who fails to declare income from, say, importing counterfeit cigarettes.

It may also be the case that different prosecuting bodies are involved in different cases and the relevant prosecutor may have put the case before the judge in a manner which reflects their particular interest.  So HMRC are focussed on getting money from their 'customers', whereas, say, the UK Border Agency may be more interested in putting a smuggler in prison than in getting money off him.

Ordinarily a person will not be fined and subject to confiscation - because both are (in effect) forms of monetary penalty.  It makes much more sense to confiscate in cases of imprisonment.

It can (and does) happen that charges of tax evasion and / or money laundering can be brought as a result of police investigations (for example) focussed on other crime.  The police may view these charges in a different way from the way that HMRC would view them in a case focussed on tax. That different view may impact upon the ultimate sentence because of the way prosecution case has been put before the judge.

David

Drugs and prostitution    2 thanks

AndyC555 | | Permalink

 "Its the same as drugs, if its not legal its pretty hard to tax it!" 

 

Being a prostitute isn't illegal although there are activities surrounding it that are (soliciting in public, for example).

There are no circumstances in which selling drugs (in the sense I guess you mean them) is legal.

In my HMIT (as was) days, I recall an old Tax Inspector talking of how prostitutes used to submit tax returns describing their activities as "seamstress". They then had a source of income for official purposes, such as mortgages, loans or rental agreements.

 

AndyC

 

 

Call Girl

guberman | | Permalink

As far as I am aware, prostitution is not illegal. Soliciting is. I was once asked to quote for a business for "Working Ladies" but my wife wouldn't let me!

The girl did not declare any earnings. This is the same as the builder/plumber etc who wants cash for his work & has no intention of declaring this income to HMRC.

To my mind this is not tax avoidance but tax evasion.

Oh dear, here we are again -    3 thanks

VIOLA26 | | Permalink

Oh dear, here we are again - last week the article on Eclipse 35 referred to wealthy investors, now another person having a go because someone is wealthy. Why cannot you refer to a property developer or an investor - why this current obsession about someone's wealth.  It's the evasion of tax that is the crime not being wealthy.

The media has invaded the subconscience and the politics of envy would win a landslide majority if it had a political party to promote it.   

As for the call girl case, we are back to the issue of whether or not the state should profit from illegal earnings by subjecting them to tax.  The actual crime for which she should have been prosecuted under the law is prostitution, not tax evasion.  Again it is the wealth we are punishing not the act.  

 

"Sir Bob Rough Diamond"    4 thanks

Roland St Clere... | | Permalink

Previous posters have already alluded to the double standards in the custodial sentence passed in this case. They have also drawn the appropriate analogy with the activities of "Bob Rough Diamond".

Hopefully he will be found guilty and jailed.

May be one day... the corrupt establishment of this country , be they politicians, press barons, bankers and bent police will be held to account. 

Job Description    1 thanks

Accountancy Direct | | Permalink

I am sure she was enjoying her job too much and forgot out paying taxes...

Double Standards    6 thanks

Ian McTernan CTA | | Permalink

If society wasn't so hypocritical then perhaps she might have declared her income as an 'escort' and been able to put this on mortgage applications, etc.  What causes most not to declare their earnings isn't usually a conscious decision to avoid taxes, but not knowing how to go about it without being painted with the stigma of being a 'prostitute'.

I'm not condoning her actions, far from it- she evaded paying taxes and should be punished, in the same way as anyone else who commits an offence should be punished.  Without knowing the full facts of the case I can't say whether a custodial sentence was warranted or not.

Having dealt with voluntary declaration cases over a number of years including 'sex workers', I find usually the best approach after starting the voluntary declaration process is to call the Inspector and explain the situation 'off the record' and agree an occupation to be entered on the self employment pages..which have included actress (performing arts!), translator amongst others.

Most of the people I have dealt with are intelligent people who do what they do by choice and have taken the time to finish their education or gained a first or second degree funded by their activities.

Maybe if the moralists stepped off their high horses and people could discuss things more openly the Revenue could bring more people into the tax net.

@people attacking Bob Diamond..why do you think he should be jailed for fraud?  What exactly did HE do?  If we're going to start jailing people then let's look at who told Barclays and the other banks to massage their figures, and sooner or later some Labour party figures will pop up..but no doubt they will get away with it once again despite running up huge debts, creating artificial growth and over spending on everything.  It's a shame politicians can't be jailed for screwing the country and leaving a legacy that will take a generation to pay off.

You are completely wrong    4 thanks

Roland St Clere... | | Permalink

What I object to is illegal accretion of wealth, through fraud, tax evasion and gangsterism.

Its not the politics of envy but the politics of fairness.

 

Tom 7000's picture

doubtful    1 thanks

Tom 7000 | | Permalink

I doubt very much you enjoy doing that job.

I hear they arent semstresses any more, times move on, they are personal trainers now...

John Stokdyk's picture

@Viola26 re: Wealthy

John Stokdyk | | Permalink

First, I would like to point out that the "wealthy" didn't actually appear in this piece, it's from a report on another legal case decided this week.

But you've caught us again! It's one of those journalistic tics that we are trying to eradicate. With your help, we will try to do so. Perhaps some kind of forfeit would work?

I've still got a couple of £15 M&S gift vouchers lying about from Christmas. I'll offer one of them as a prize for the first member to report any further instances of the word "wealthy" to describe a taxpayer in any item written by a member of the AccountingWEB editorial team. Any article has to have been published after noon today (11 July).

One rule for political party supporters, another for the rest    4 thanks

BryanS1958 | | Permalink

She should have made a hefty political donation, then she may have found herself promoted to the House of Lords, instead of going to jail.  Never mind, she can always write a book/film while she's there.

I can't wait to see what the outcome is of the LIBOR rigging is; any bets that the perpetrators get off without going to jail?  They may face the ultimate sanction of having to resign with a hefty pay off.

Can't you see the difference    2 thanks

Roland St Clere... | | Permalink

between labour politicians who for the most part wanted the lot of the poor to be improved, to see real investment in our public services

after years of Tory under investment , and Diamond who was out for personal gain, pure and simple..

 

Joint Partnership

S.K | | Permalink

Maybe the two roads will crossover in jail - form a partnership: Diamond Escorts - charge at the Libor rate

Just personal tax    1 thanks

kenatnam | | Permalink

Should she have been charging Vat on top?

Free publicity ?

mickeyparish | | Permalink

The press has now give Miss Asutaits the opportunity if she were so inclined to double her fees when she comes out early after a few weeks, and earn the fine, the tax and the confiscation back in rapid time, hopefully paying her dues properly this time round.....

Tom 7000's picture

ha ha

Tom 7000 | | Permalink

Her hourly rate is higher than you all put together  :oP

Double Standards

JK Jolyon | | Permalink

hopkins-hohg wrote:

If society wasn't so hypocritical then perhaps she might have declared her income as an 'escort' and been able to put this on mortgage applications, etc.  What causes most not to declare their earnings isn't usually a conscious decision to avoid taxes, but not knowing how to go about it without being painted with the stigma of being a 'prostitute'.

I'm not condoning her actions, far from it- she evaded paying taxes and should be punished, in the same way as anyone else who commits an offence should be punished.  Without knowing the full facts of the case I can't say whether a custodial sentence was warranted or not.

Having dealt with voluntary declaration cases over a number of years including 'sex workers', I find usually the best approach after starting the voluntary declaration process is to call the Inspector and explain the situation 'off the record' and agree an occupation to be entered on the self employment pages..which have included actress (performing arts!), translator amongst others.

Most of the people I have dealt with are intelligent people who do what they do by choice and have taken the time to finish their education or gained a first or second degree funded by their activities.

Maybe if the moralists stepped off their high horses and people could discuss things more openly the Revenue could bring more people into the tax net.

Absolutely agree.

It was the lack of eaily digestible information for escorts that prompted me to set up http://www.taxrelief4escorts.co.uk after I retired from doing tax work.

It all depends.    2 thanks

SimonP | | Permalink

kenatnam wrote:

Should she have been charging Vat on top?

Not if she was underneath.

George Attazder's picture

The best advice...    3 thanks

George Attazder | | Permalink

... that I can offer this young lady, is to lie back and take her punishment.

Meanwhile, most of her clients should be bloody well hung.

I do not condone her actions but ...    5 thanks

SimonP | | Permalink

According to The Guardian it costs about £119,000 [2008 figures] for each new prison place http://www.guardian.co.uk/commentisfree/2008/jul/28/justice.prisonsandprobation plus a further £47,000 [March 2011] a year per the BBC http://www.bbc.co.uk/news/entertainment-arts-12879042.

She received a sentence of 16 months and will be out in a year. That will have cost us taxpayers £166,000.

It has also taken about 2-3 YEARS to get this to court. Goodness knows what THAT has cost us too.

I read that they'll try and recoup some of the tax but obviously not all.

I totally get the message being put out but in this particular case, would it not have been better for the public purse for her to have been allowed to carry on working (prostitution itself is not illegal), and correctly paying tax on any new income and also fine her for the evasion and unpaid tax, which she could have paid out of those earnings and the cash she had laying around?

Instead she will be another drain on our resources and I read that she has now dropped out of her degree course and turned to drugs. What a waste!

I liken this to good old Customs & Excise who used to put small companies out of business by selling off assets to recover VAT owed rather than allow them to trade through and pay in instalments.

What was her MA in?

mike_thompson | | Permalink

Banking, ethics or an ology?

There was nothing to stop her ...

mikewhit | | Permalink

... setting up a legit Ltd Co and banking the cash every week, then drawing salary and divi.

Or would the MLR regs have been suspicious given the cash bankings ?

 

Perhaps there is a dread among the general public of "tax" if they are working for themselves 'unofficially' (ie they are not familiar with tax accounting) - I was amazed at the attitude of a plasterer (a good one) who was afraid to supply an invoice for some work done "in his spare time" due to worrying about how much tax he might have to pay.

The tax might have amounted to 20% of the profit from the invoice, and he could have wound up the materials cost if he'd wanted to reduce profits; possible tax less than £20.

What is it people sign when

AddsUP2Me | | Permalink

lol

 

If someone has their tax

AddsUP2Me | | Permalink

If someone has gone to jail like this girl has, if they later discover that she did work as an escort in the eight years leading up to that which she was found guilty of evading taxes in, can they reassess that? Or is this final?

Living off immoral earnings?    1 thanks

wingco44 | | Permalink

Surely, this makes HMRC a pimp?

What about the VAT?

Roland195 | | Permalink

This was raised before in jest, but if we assume that this lady was making over £150,000 then should she have been liable to VAT registration? I can't think of an exemption that covers it - personal tuition perhaps?

Was she obliged to provide her customers with VAT receipts?

 

 

 

VAT    2 thanks

wingco44 | | Permalink

She actually got done for evading VAT too.  I wonder what she really earned over two years of her Masters degree.  I believe she dropped out of her course.  On that money, who needs a masters.

She is actually perfectly right not to pay VAT.  She is providing a definite medical service by a qualified professional.  I won my case against HMRC on similar grounds; not that I was a prostitute (I wouldn't have earned enough to breach the VAT threshhold!!), but I provide a medical service.

Unfair

Roland195 | | Permalink

In this case, and presumably for the profession in general, it seems hypocritical of HM's Government to declare that earnings are subject to taxation, both direct & indirect but will not live up to their end of the tax bargain in that it cares nothing for the safety & security of the people involved, would not enforce debts due through the courts or provide for any means of regulation.

I would imagine that they would also be prohibited from claiming tax credits (although this case appears not to need it I am sure they are not all earning like this).

 

  

The taxman v prostitutes

JK Jolyon | | Permalink

Roland195 wrote:

In this case, and presumably for the profession in general, it seems hypocritical of HM's Government to declare that earnings are subject to taxation, both direct & indirect but will not live up to their end of the tax bargain in that it cares nothing for the safety & security of the people involved, would not enforce debts due through the courts or provide for any means of regulation.

 

 

Yes, and that's a point made by an article 'The taxman v prositutes' published on-line in the New Statesman this morning. http://www.newstatesman.com/blogs/lifestyle/2012/07/taxman-vs-prostitutes

I should declare an interest, as the article is partly based on an interview with me.

As far as VAT is concerned, prostitution is a standard rated supply, that was confirmed by the Polok case. It's kind of hard to see how the medical exemption (mentioned by somebody above) could apply because the last time I looked 'sex-worker' wasn't in the VATman's list of recognised medical professionals.

George Attazder's picture

Polok    1 thanks

George Attazder | | Permalink

Wasn't Polok concerned with the liability of the supplies of the escort agency?

Isn't the relationship between a prostitute and their client one of a contract of service, rather than a contract for services; the personal service of the prostitute is required, there's mutuality of obligations ('nuff said! ;)), and the client generally has control of the where, when, what and how.

So this nice young lady hasn't done anything wrong. Either her clients or the agency should have operated PAYE and there's no VAT as employments are outside the scope by virtue of Article 9 of the 6th Directive.

Poor girl. She should never have gone down!

Employment

JK Jolyon | | Permalink

Yes, Polok was concerned with the supplies of an escort agency, but I think it's clear from the rationale of the judgement that supplies made by an escort to her client would be taxable. Though obviously not if the relationship amounted to employment.

There seems to be an arguable case that a prostitute getting work through an agency is an employee of the agency. Obviously it depends on the precise working relationships, but agencies work very hard to avoid employment because they would then have very little defence against a charge of 'control and gain' (the offence which replaced living off immoral earnings).

Being an employee of the punter is an interesting idea but a look at almost any independent escort's website would demonstrate they offer services. They decide what they want to offer, set their prices, choose where and when they will work, and usually have a vetting and security system to weed out undesirable clients. And most will tell you that during a booking they are very definitely in charge.

Self Employed?

NigelHenshaw | | Permalink

Pre self assessment would this have been dealt with under Schedule D Case V (Income From A Broad!!!)?

Anishine's picture

Thanks for all the puns...    1 thanks

Anishine | | Permalink

both good and the ones that made me groan! I needed a smile this Friday. 

Assets

kenatnam | | Permalink

This is a clear case of sex discrimination in the workplace - I can't make that sort of return on my assets!

Quite straightforward    1 thanks

Stalytax | | Permalink

I acted for a lady who was an escort, she came to me saying her previous accountant had a very judgmental attitude towards her that made her uncomfortable, She was from eastern Europe, and had registered as self employed as soon as she came here.

We put 'escort' on the SA Returns as her self employed occupation, as she did 'home visits' we kept a mileage log, and we went over what expenses were 'wholly and exclusively' for her business and what would not be allowed. Absolutely no problems, from plod or HMRC, and when she eventually got married and retired from escorting, she got a mortgage partly on the strength of her agreed self assessment returns, together with P60's from her current (non - related) PAYE earnings. 

 

 

 

 

 

AnnaKournikovasKnickers's picture

A 'passage to a better life'?

AnnaKournikovas... | | Permalink

Very droll!

Medical Services - VAT Exempt

wingco44 | | Permalink

My organisation is not on the list of 'medical practitioners' for VAT exemption either but it was judged to be VAT Exempt.  The Judge in my case took a more pragmatic approach and took heed of the 6th Directive (VAT). HMRC impose more stringent rules for VAT and list Exempt Services but this runs very much counter to the intentions of the EU Directive and could result in penalties against HMRC.  Another reason as to why we need an independent EU Court to decide in such matters.

My comment about this young lady 'providing a medical service' was tongue in cheek and no Court would agree it was medical, I assume!......but then, who knows?