Do prostitutes charge VAT?

Back in 2002 a High Court judge ruled that the VATman is perfectly entitled to pursue prostitutes. Mr Justice Jacob decided that members of the world's oldest profession should not be allowed to exploit a loophole because of their illegal activities and avoid paying VAT.

The case followed an earlier VAT tribunal ruling that an escort agency was unlawful and therefore could not be taxed.

The tribunal said the business "consists wholly, or at least very substantially, of the procurement of women for the purposes of their becoming common prostitutes".

When the tribunal found that the agency was "straightforwardly criminal", it meant that Customs and Excise could not claim VAT.

The owners had always claimed their business was lawful but said their turnover was below the threshold for VAT. But the judge overturned the ruling. He said: "I conclude that this case is not within the very narrow rules which allow moral scruple by a paradox to reward criminality by exempting it from taxation."

Under EU harmonisation of taxation, VAT is payable on a wide range of services without any difference being drawn over whether it is legal or illegal. Only drug dealing and counterfeit money apparently escape being taxed.

Faulty accounting

The EU has set up a special commission to monitor all funds going to Bulgaria and Romania. My tutor told me a joke about this.

“When we were occupied by the Roman Empire, we destroyed them with our faulty accounting.

When we were occupied by the Byzantine Empire, we destroyed them with our faulty accounting.

When were were occupied by the Ottoman Empire, we destroyed them with our faulty accounting.

When we were occupied by the Soviet Empire, we destroyed them with our faulty accounting.

Now the European Union has set up these commissions to monitor our accounting and we will surely destroy the EU!”

As reported by a Peace Corps Volunteer currently serving in the Republic of Bulgaria.

Top 10 Reasons I Like Being An Accountant

A couple of months back the David Letterman show, which regularly features funny Top ten lists, asked ten US accountants (CPAs) to explain the top ten reasons that they like being an accountant.
Sadly there are a number of stereotypes in the list.

The long arm of the Australian Tax Authorities

Crocodile Dundee actor Paul Hogan is reported to have told Australian tax authorities to “come and get me”. This was after he learned in California that the Australian Taxation Office is asking the U.S. Internal Revenue Service to help round up nine years’ worth of records from three U.S. banks.

The actor told The Australian newspaper that the tax authorities are on a “long-distance fishing expedition” to get his financial records. Four companies related to him are allegedly part of the probe. But Hogan is defiant. “They should build a statue of me up there at the tax office,” he said to reporters outside his Santa Barbara mansion, according to wire reports.

Despite the tax probe, Hogan plans to return to his native country in September to shoot a movie. “I’ll be arrested the minute I land on the shore, of course, but I have a gun, so be warned,” he said to Australia’s Ten Network television channel.

With thanks to WEB CPA for spotting this one.

Taxation 3.0

I was chatting with John Stokdyk of AccountingWeb on Tuesday and mentioned a magazine that often publishes my quotes and advice on careers related issues for younger tax professionals.
It's called Taxation2 (to distinguish it from Taxation itself)

I liked John's suggestion that a more modern title would be Taxation 2.0 (two point zero).

We both then had the same idea. My Tax Advice Network is Taxation 3.0 (Not that we in any way compete with Taxation magazine!)

For anyone not quite following this - we were inspired by the references to the internet that have progressed from web 2.0 to web 3.0 in a very short period of time.

What would you search for?

I recently celebrated the first 'half-birthday' of the launch of the Tax Advice Network. I noted that over the first 6 months since launch thousands of searches have been performed on the site;

Perhaps the strangest search term was 'VAT on colonic irrigation'!

At what point do you enter or leave the UK?

I hesitate to share another Absurd Tax 'funny' so soon after the last one but it's worth it.

The tax rules for counting days of residence in the UK have changed recently making this question more relevant than ever before. Previously days of arrival and departure were not counted.

The new legislation includes a clear exemption for any day on which someone's presence in the United Kingdom is solely as a passenger in a part of an airport or port not accessible to members of the public unless they are arriving in or departing from the United Kingdom.

HMRC have therefore confirmed that changing planes in the UK (eg: on a flight from the USA to a European destination) would not be counted as a day of residence here - as if anyone could seriously have suggested otherwise.

So in the case of flight delays and trips in and around 5 April, how far do you have to get through the airport to have entered or left the UK? Assume you're leaving, is it enough to have gone through passport control? Customs? Into the departure lounge? On the plane? Flown off?

And of course the reverse would be true for arrivals. I can see it now, someone lands in the UK just before midnight and loiters before going though passport control until after the clock strikes 12.