what makes you think that she's
a. not allowed to live here
b. isn't paying and NI/ Tax etc
If she's an EU citizen she can live here, if she's from somewhere else probably not but you're hardly likely to know at which stage any application to stay might be at. Some people are permitted to work, some not, and I don't actually agree that it's working immigrants ( legal or illegal) that is running the country into the ground, any market that moves money around has to be good, and ought to be encouraged, in fact i'm all for anyone who has made an application to stay being allowed to work- and if they start a successful business being allowed to stay automatically.
Where is this lady originally from?