The Day Miss Whiplash Was On The Receiving End Of A Blow From The UK Taxman
Brothel keeper Lindi St Clair, celebrated by Britain's red-top tabloid newspapers as "Miss Whiplash," lost her 15-year battle against the taxman on this day in 1990. The Inland Revenue demanded back-taxes and brushed aside her argument that they would be living off immoral earnings.
The tax authority said the money was due because it considered prostitution to be a trade, prompting the remark by St Clair that the taxmen were "nothing more than Her Majesty's pimps."
St Clair's 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 (plus 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.
Born as Marian June Akin in 1952, at the age of 14 she ran away to London from her country home and was soon working the streets as a prostitute. Carefully taking care of the money she earned, after some time she was able to purchase a large house in the capital, which she converted into a lavish brothel.
Her clients came from the worlds of politics, diplomacy and business. Such was her success as a madam and dominatrix that she went on to own a Rolls-Royce and a yacht.
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 was also 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)
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.
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 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.
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.
In January, 1993, a major police hunt was launched after her car was found abandoned on the south coast. But it was later discovered she had gone on a luxury cruise.
In May of that year, after failing to pay the taxes that the Inland Revenue had demanded in 1990, she was taken to the High Court and declared bankrupt.
After the case she told reporters: 'The bankruptcy petition was for £112,000 the Revenue claims I owe, but that is only up to 1983. There is a further 10 years' unpaid tax they are claiming, bringing the amount up to £250,000.
'But the Government can whistle up their dispatch boxes for it. I went on that lovely world cruise first-class and blew the lot.
'They are not getting tuppence out of me. Now all I've got left is zilch. I sold my brothel last year. I've got no assets.
"Now I've retired. I've gone past my sell-by date. I'm going to sign on as unemployed."
St Clair, who sometimes spelt her name St Claire, stood and failed eleven times to win a seat in Parliament as leader of the Corrective Party. In 2009 she reverted to her birth name and has since embraced Christianity.
She was confirmed in the Church of England by the Bishop of Hereford in November 2009