IR35 legislation would be a good jumping off point there...arguably if they were working from a whorehouse then the girls should have been subject to PAYE and treated as employees. It would probably be a test case if it were tried on that basis, and quite a bunfight in court. However, based on the two companies annual returns, under declaring corporate earnings (and hence corporate tax) seems the more likely issue
yeah the self employed vs employee argument would probably result in a win for HMRC, but most likely not worth the hassle. Esp due to the industry and the added drama.
Just be underdeclaring income, and quite possibly over declaring outgoings to reduce CT.
Vat might not actually be that big an issue if they're on a flat rate scheme.
Its all conjecture like. They could have been up to anything, but its been there that long as an open secret just odd Nov 2016 is the final straw. The owner probably got a better parking spot at the local golf club than a HMRC director* or something as petty
* or he had a dispute with a girl there.