'High-class' escort jailed over £120,000 tax fraud – MLR issue?

The Telegraph reports that a £1,000-a-night prostitute, Donna Asutaits, has been jailed for tax evasion after she cheated the taxman out of tens of thousands of pounds.

John Stokdyk is curious whether we’re seeing evidence of highly paid tax evaders in the sex industries coming to light through taskforces and targeted campaigns.

Does this throw any light on the money laundering regulations or is it just a case of tax evasion?

Here are the details of the case:

  • The self-employed escort earned more than £300,000 in two years by selling herself to wealthy businessmen
  • She studied for a master's degree while she paid a £110,000 cash deposit on a £360,000 apartment
  • When police raided her home they uncovered nearly £80,000 in cash
  • She failed to file any tax returns for most of her working career, which she claimed she had worked as an escort for a decade
  • Prosecutors initially claimed Asutaits made £870,000 over five years and owed £315,000 in tax, but she successfully argued that her period of tax free earnings lasted just two years
  • Jailing her for 16 months Judge Peter Testar said she had deliberately avoided paying any tax from the start
  • A proceeds of crime hearing will take place later this year to recoup some of the tax
Comments

Who said Tax wasn't exciting!    1 thanks

The Black Knight | | Permalink

About time, I wonder if we will see drug dealers prosecuted for tax evasion soon.

Just shows why tax evaders quickly get more out of life by not paying tax.

Focus    2 thanks

90453Fo | | Permalink

Silly me! I thought from the headline that we should be worrying about where her customers were getting their cash from in the first place - £1,000 a night, that's more than you can get from the cash point?

Unfair

Roland195 | | Permalink

Would HMRC have accepted tax returns with "Prostitute" entered in the description of trade box?

Would they have sent an officer round to check her claims for expenses? The capital allowances on her "equipment"? Should there be a restriction for private use?

Could such a declaration on her tax return be held against her in court? (I am aware that prostitution is not actually illegal in the UK but most of the industry and supporting services is).

 

 

Poor career choice

Stephen Morris | | Permalink

She should have got a job as a State employee. They rob the public blind with impugnity. Nice work if you can get it.

sharing    1 thanks

The Black Knight | | Permalink

90453Fo wrote:

Silly me! I thought from the headline that we should be worrying about where her customers were getting their cash from in the first place - £1,000 a night, that's more than you can get from the cash point?

I think they have several customers?

But then they are only £65 per hour round our way (value for money or what?)

What is high class? The Flat? The clothes or the fake accent?

That reminds me of the old

90453Fo | | Permalink

That reminds me of the old joke about the lady who went out to work for the night and came back with earnings of £20.05. When asked who had the cheek to pay her 5p she replied "All of them".

davidwinch's picture

Her potential problems    1 thanks

davidwinch | | Permalink

Apart from having to get used to new sleeping accommodation and a different class of room-mate, she will potentially have problems with her proceeds of crime proceedings.

The likelihood is that the Court will hold that she has a 'criminal lifestyle' having been convicted of an offence continuing over at least 6 months from which she has obtained a benefit of at least £5,000.

That means all her (financial) assets are at risk of being grabbed by the tax man.

It was also alleged that she obtained a £250,000 mortgage advance by claiming to have income as a racehorse consultant (something to do with studs, perhaps?).

Subject to a case which the Supreme Court is currently chewing over, that could result in a very substantial finding of 'benefit' against her in the confiscation case.

As for The Black Knight's point, there is specific legislation for taxing income from criminal conduct in Part 6, PoCA 2002.  I have seen that legislation put to use (but not in connection with anything so glamorous as this case!).

David

Taxable?    1 thanks

Roland195 | | Permalink

davidwinch wrote:
As for The Black Knight's point, there is specific legislation for taxing income from criminal conduct in Part 6, PoCA 2002.  I have seen that legislation put to use (but not in connection with anything so glamorous as this case!).

David

I had always thought that income from illegal sources - drug dealing, gun running etc was not within the scope of income tax, at least in the UK. Presumbly the UK Government can't prohibit behaviour via one department then seek to benefit from it via taxation (although they already do to an extent with tobacco & alcohol I suppose).

davidwinch's picture

Normal rules    2 thanks

davidwinch | | Permalink

A trading activity, such as drug dealing or gun running, is taxable in the same way as car dealing or importing furniture.

However simple theft of cash, for example, is not taxable as there is no trading activity.

David

ShirleyM's picture

Mortgages

ShirleyM | | Permalink

Off topic slightly ... but I wonder if HMRC 'verified' her income for the mortgage? I wonder if this was how she was discovered.

Are any lenders using this service?

Everyday is a school day

Roland195 | | Permalink

davidwinch wrote:

A trading activity, such as drug dealing or gun running, is taxable in the same way as car dealing or importing furniture.

However simple theft of cash, for example, is not taxable as there is no trading activity.

David

So is submitting a tax return declaring a couple of hundred thousand pounds "trading profits" from drug dealing with the trade description of "recreational pharmacist" enough of a confession to convict you?

 

only    1 thanks

The Black Knight | | Permalink

Roland195 wrote:

So is submitting a tax return declaring a couple of hundred thousand pounds "trading profits" from drug dealing with the trade description of "recreational pharmacist" enough of a confession to convict you?

Only if they read it!

They are not usually that bothered probably just glad to get some tax.

I always wonder why lifestyle and the proceeds of crime act are not used for the drivers of Porsches and Range Rovers with no proof of income. Dale farm residents being a televised example.

davidwinch's picture

Posh cars but no income    3 thanks

davidwinch | | Permalink

Apparently what triggered a police investigation in a recent major PAYE fraud case was the fact that certain people were living the high life without any visible source of income.

Read all about it HERE.

David

Is that not what the Italians did?

Roland195 | | Permalink

The Black Knight wrote:
I always wonder why lifestyle and the proceeds of crime act are not used for the drivers of Porsches and Range Rovers with no proof of income. Dale farm residents being a televised example.

Had a look around to see who was driving Ferraris then checked up on the registered owners income. Sounds like a good idea to me but doubtless against someone's Human Rights.

 

Tax evasion or money laundering

JK Jolyon | | Permalink

There are a number of very curious facts in this case, not all of which appear in the Telegraph report.

She was charged with three offences and pleaded guilty to common law Cheating the Public Revenue of £120k in tax. She pleaded not guilty to the other two, one of which was laundering £110k on behalf of two alleged criminals. This £110k was presumably the cash deposit she put down on her flat purchase. Earning money from your own prostitution is not a crime, so if that was the source of the money it was not the proceeds of a crime. That would suggest the CPS thought it came from some other source.

The police found just over £130k in cash when they raided her flat (and a safety deposit box) on two separate occasions, while investigating another crime - we don't know what that crime was except that it wasn't tax evasion.

She admitted earning £300k in just two years from escorting. It is certainly true that some escorts can earn large sums of money, but it takes years and a lot of hard work to build up a reputation and client base. It is not credible that a 24 year old (as she was at the time) was earning £150k a year.

When arrested she read out a pre-prepared statement admitting that all the money came from escorting.

It's almost as though she's admitted tax evasion instead of some other unknown crime which might have had more serious consequences. And interesting that she's admitted to evading tax (I'm not sure whether this includes interest and penalties) of £120k which is very close to the £130k which was seized by the police. That should help settle the Proceeds of Crime proceedings.

There's a blog about it with a few more details on my web-site http://www.taxrelief4escorts.co.uk/2012/07/10/escort-jailed-for-failing-to-pay-tax/

 

carnmores's picture

i wasnt aware that it was an offence to sell your body

carnmores | | Permalink

it is to sell other peoples or run a brothel

Level Playing Field

bobhurn | | Permalink

It will be interesting to see if confiscation proceedings are launched against the banks in respect of LIBOR fraud, one has admitted this occurred for more than six months should this not equate to a criminal lifestyle.  Don't hold your breath.

 

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