Roundup: Britain's sex trade targeted by taxman in new drive by revenue enforcers

It's an industry that generates billions of dollars every year in income, but many of its participants never pay their due taxes.

That, though, is about to change with the decision by Britain's taxman to launch its first ever special task force to track down the people in Britain who earn up to thousands of pounds a day from their involvement in the sex trade.

Owners of adult clubs, adult entertainers and even brothel keepers will by targeted by the new task force launched by Britain's tax and customs authority -- HMRC.

Britain's sex trade is estimated to employ more than 100,000 people.

HMRC says the rise of the internet had caused a drastic increase in online escort agencies, with the sex trade likely to be much bigger than it said to be in 2010 when it was estimated to generate earnings of around 7.6 billion U.S. dollars a year. That doesn't even include millions of dollars of undeclared income earned by self-employed prostitute working in rented flats or illegal brothels.

One study revealed that in London, there were an estimated 900 brothels, with Westminster having the highest number. It is also estimated four out of every five call girls working in London are foreigners, many of them from Eastern Europe and South East Asia.

Around 70 percent of prostitutes in Britain now work indoors, driven off the streets by local communities and dangers of attacks. Many operate under the cover of saunas or massage parlors.

Tax officers no longer accept an excuse from call girls that they were not liable to pay tax on "illegal activities." The British courts have ruled that is not the case, and even the proceeds from prostitution are taxable.

Tax inspectors have warned those who continue to flout the legislation and do not register with HMRC will be tracked down. Businesses liable to pay value added tax (VAT), general income taxes and national insurance are being targeted.

In a recent court case, a woman from the southern England county of Sussex was sentenced to three years in prison for tax fraud in relation to earnings from her high class escort agency.

Jim Stevenson, Head of HMRC Taskforces, said: "The people being targeted by this taskforce have no intention of playing by the rules, and we won't tolerate this. No industry is safe where tax evasion is concerned -- we won't stop tracking people down and taking back what they owe."

Tax inspectors will swoop on tax evaders by checking credit and debit card records to track down payments made to the so-called "hidden economy", as well as checking on business marketing their adult sex activities on the internet.

Investigators will also swoop on sex clubs to check records.

The friendly advice to people involved in the sex trade in Britain, is pay your taxes -- even if the activities are illegal. Endit