Comedian Jimmy Carr: I've made terrible error over tax

 
Jimmy Carr Jimmy Carr: No longer involved in the tax scheme

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Comedian Jimmy Carr says he has "made a terrible error of judgement" over using a tax avoidance scheme.

In a statement on his Twitter account, Mr Carr said he was no longer involved in the K2 tax shelter.

Prime Minister David Cameron on Wednesday called Mr Carr's use of the scheme "morally wrong".

But the PM refused to comment on Take That star Gary Barlow's tax affairs - saying it was a different case - after Labour called for his OBE to removed.

The K2 tax scheme used by Mr Carr is a way of lowering the amount of tax paid. It is legal and Mr Carr made clear in his statement it was fully disclosed to HMRC.

In a series of messages on Twitter Mr Carr said: "I appreciate as a comedian, people will expect me to 'make light' of this situation, but I'm not going to in this statement.

"As this is obviously a serious matter. I met with a financial advisor and he said to me 'Do you want to pay less tax? It's totally legal'. I said 'Yes'."

"I now realise I've made a terrible error of judgement.

"Although I've been advised the K2 Tax scheme is entirely legal, and has been fully disclosed to HMRC (Her Majesty's Revenue and Customs).

Analysis

Do regular taxpayers care whether a comedian pays his tax? Or do they think it a joke that he, and hundreds of others, are given the opportunity to avoid paying it?

The government says it wants to put an end to "contrived" avoidance schemes. It needs the extra tax income after all.

Next year it plans to bring in a new general anti-abuse rule, to stop cunning schemes designed solely to avoid tax.

But accountants are lining up to argue that the line between artificial avoidance and legitimate tax planning is blurred - and the proposals will not end disputes entirely.

Which side of the line is sheltering your family from inheritance tax? And what about tax breaks for investing in small businesses?

Clearly Jimmy Carr's "error of judgement" will not be the punchline to this story.

"I'm no longer involved in it and will in future conduct my financial affairs much more responsibly. Apologies to everyone. Jimmy Carr."

More than 1,000 people, including Mr Carr, are thought to be using the Jersey-based K2 scheme, which is said to be sheltering £168m a year from the Treasury.

Under the K2 scheme, an individual resigns from their company and any salary they subsequently receive is paid to an offshore trust.

Downing Street welcomed Mr Carr's apology.

A spokeswoman said: "HMRC are working hard to investigate the sort of scheme that Jimmy Carr had been reported to be involved in to ensure that they are not aggressively avoiding tax, and, if they are, they are closed down."

She defended Mr Cameron's decision to speak out about an individual's tax affairs - in contravention of normal government practice.

"The prime minister was expressing what probably lots of people felt after reading the coverage," she said.

Business Secretary Vince Cable also backed the prime minister, telling BBC Radio Sheffield he was not prepared to go "through a hit-list of our celebrities" but adding: "We just want people to pay their dues."

The Lib Dem minister said he did not use tax avoidance schemes himself and that, as far he knows, no members of the cabinet did either, saying: "We observe the law... but also try to set an example."

'Unfair'

According to The Times newspaper, which first published details of Mr Carr's tax arrangements, the K2 scheme enables members to pay income tax rates as low as 1%.

The prime minister was asked about Mr Carr's arrangement on Wednesday during a visit to Mexico for the G20 summit.

He told ITV News the comedian's tax affairs were "straightforward tax avoidance" and it was unfair on the people who pay to watch the comic perform that he was not paying his taxes in the same way that they did.

"I think some of these schemes - and I think particularly of the Jimmy Carr scheme - I have had time to read about and I just think this is completely wrong.

"People work hard, they pay their taxes, they save up to go to one of his shows. They buy the tickets. He is taking the money from those tickets and he, as far as I can see, is putting all of that into some very dodgy tax avoiding schemes.

Start Quote

I'm not in favour of tax avoidance obviously, but I don't think it is for politicians to lecture people about morality”

End Quote Ed Miliband Labour leader

"That is wrong. There is nothing wrong with people planning their tax affairs to invest in their pension and plan for their retirement - that sort of tax management is fine.

"But some of these schemes we have seen are quite frankly morally wrong. The government is acting by looking at a general anti-avoidance law but we do need to make progress on this.

"It is not fair on hard working people who do the right thing and pay their taxes to see these sorts of scams taking place."

'Take That'

Labour leader Ed Miliband opted not to join in with the chorus of criticism of the 8 Out of 10 Cats star's tax affairs.

He said: "I'm not in favour of tax avoidance obviously, but I don't think it is for politicians to lecture people about morality.

"I think what the politicians need to do is - if the wrong thing is happening - change the law to prevent that tax avoidance happening."

Shadow leader of the House of Commons Angela Eagle turned her fire on Take That star Gary Barlow, who with two bandmates, is facing questions about £26m they are alleged to have invested in a scheme that is facing a legal challenge from HMRC.

The Labour MP said: "The prime minister rushed to the TV studios to condemn the tax avoidance scheme used by Jimmy Carr but he did not take the opportunity to condemn as morally repugnant the tax avoidance scheme used by Conservative supporter Gary Barlow, who's given a whole new meaning to the phrase 'Take That'.

"If it's all so morally repugnant, why has he just been given an OBE in the birthday honours list?

"Why is the prime minister's view of what's dodgy in the tax system so partial? Sir Philip Green has interesting tax arrangements but far from being labelled morally repugnant in a Mexico TV studio, he's got a government review to head up."

Retail magnate Sir Philip has firmly denied avoiding hundreds of millions of pounds in tax by transferring ownership of his Arcadia business, saying that Arcadia was bought by his wife, Lady Green, in 2002 and because she has not lived in the UK for 15 years no tax was due on any dividends that were paid to her.

During a joint press conference with Burmese opposition leader Aung San Suu Kyi Mr Cameron declined to comment on Mr Barlow's tax affairs.

He said he was not "going to give a running commentary on different people's tax affairs", and said he had made "an exception yesterday... it was a particularly egregious example".

Mr Carr, who has satirised "fat cat" bankers, is reported to protect £3.3m a year from tax by channelling cash through the K2 scheme, which is under investigation by HMRC.

The comedian is thought to be one of more than 1,000 beneficiaries who shelter some £168m from the taxman each year using the company.

 

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  • rate this
    -2

    Comment number 1415.

    Nowadays, avoiding tax, is just one avoiding giving one's money to the pinstripe ponzi dinosaur "too big to fail" city slickers.

    Can one blame one for this.?

  • rate this
    +1

    Comment number 1414.

    "Would you like to pay less tax, and it's completely legal?"
    "No, no, I don't want it, I'd rather this fantastic governement have my money, they do such wonderful things with it!"

    True story.

  • rate this
    +2

    Comment number 1413.

    The issue David Cameron has is that he has positioned himself as a Moral Guardian so I only hope for his sake that he or his cabinet colleagues, allies, family and advisers etc have no 'skeletons in the cupboard' on tax avoidance. Journalists will be hunting for this and he will be asked to offer the same advice to any 'guilty' party - or the 'double standards' accusation will ensue.

  • rate this
    0

    Comment number 1412.

    The rules are the rules and if the scheme is legal then people will use it. If one takes this line of argument to the extreme should people not have an ISA as Interest is paid Gross? I imagine that many many high profile celebs in the UK make use of such schemes.

  • rate this
    +1

    Comment number 1411.

    ok, so lets stop Duty Free at the airports as that "avoids" tax, and what about all the TESSA and ISA savings accounts? they avoid tax too. Where's it going to stop. Oh and don't forget Cameron inviting wealthy French nationals to domicile in the UK to avoid high French Tax rates..........

  • rate this
    +2

    Comment number 1410.

    Rich for Cameron to criticize Jimmy Carr when many of the Conservative's financial advisers were responsible for setting up avoidance schemes when working for the banks and the big 4 tax advisory companies.

  • rate this
    +1

    Comment number 1409.

    David Cameron's very public and personal attack on Jimmy Carr is ill advised. It is not helpful to single out an individual for taking advantage of an apparently legal scheme that many others have also used. It would be better to have an intelligent debate about the "morality" of the tax system itself. After all, wasn't tax introduced as a means of an elite group financing war?

  • rate this
    +1

    Comment number 1408.

    I would if I could. Who in their right minds wants to contribute their hard earned money to prop up (amongst other things) a benefit system for people who won't contribute. I dont think anybody minds paying taxes when the money is spent wisely on schools, hospitals etc. Privatise everything. Pay for what you use. If you cant afford it, you cant have it. If you still want it work harder.

  • rate this
    0

    Comment number 1407.

    no one like giving money to the tax man, especialy when the single parent mother with 4 kids from 3 or 4 different fathers never works!!!! so any legal tax avoidence i can forgive Jimmy or anyone.
    by the way i am PAYE and higher tax so i pay mine.

  • rate this
    +1

    Comment number 1406.

    What about these numerous internet companies like Amazon? They base themselves in Luxembourg and pay a pittance in tax, as they are shutting down our high street shops by undercutting them. Time to buy British, it's not patriotic it is more important, it is investing in our future.

  • rate this
    +2

    Comment number 1405.

    Considering the big corporations, CEOs, Directors, etc. that use tax avoidance schemes. Many of which are very likely major contributors to the Conservatives coffers. For Cammy to pick on and single out a comedian is hypocrisy beyond comparison. So nothing out of character there then.

  • rate this
    +25

    Comment number 1404.

    All of these off shore deals are basically a rich persons fiddle. The whole off shore financial sector needs tighter global control. If you work here or earn money here from whatever source be it telling jokes or manufacturing widgets you should pay your taxes here too.

  • rate this
    -1

    Comment number 1403.

    Pay your taxes Jimmy!

    We need the money to completely change the education system AGAIN!

    Has someone told Gove we are in the age of austerity?

    Sorry, wrong Blog!

  • rate this
    +1

    Comment number 1402.

    I see what is wrong with using existing laws and poorly worded legislation to your advantage. Whether it is tax, ot other matters. But it is understandable

    What is worse is when a politician is responsible for poorly worded legislation, full of holes and weak points, a politician earning a not inconsiderable wage for being incompetent then pontificates and accuses others of moral weakness.

  • rate this
    +22

    Comment number 1401.

    If it is possible to legally avoid tax people are going to - encouraged by their accountants who will always be pushing to "add value" to their clients. Morally it doesn't seem right - I think its ok for a politician to point that out. However these loop holes have been know about for some time so it does reflect badly on the chancellor for not actively moving to close them, it needs to be done.

  • rate this
    0

    Comment number 1400.

    1203Sandstorm
    As for the accountant who says he doesn't sit in judgement on his clients' moral values - we must remember that the real evil parasites here are not greedy celebs or inept politicians but the accountants - they come up with these schemes and let their clients take the flack.
    =
    Accountants are not moral advisors. Accountants present options, you make the choice, it's your morals.

  • rate this
    +2

    Comment number 1399.

    So Carr uses what is a legal method of tax avoidance and is being hammered for it. Sorry am not joining the Carr bashing bandwagon.

    Anyone who has the chance to save money legally will use it whether they are rich or poor.

    If blundering HMRC don't want us to use these loopholes then close them now.

  • rate this
    -1

    Comment number 1398.

    Carr is a hypocrite, which Take That were not- they never attacked bankers. Carr is a counter-culture wannabee who really lives high on the hog. The scheme he's in is not illegal, and nor were the schemes of the bankers. He's not guilty of a crime, and nor were the bankers. So apologise to the bankers for calling them criminals. And stop being a moral coward. Hypocrisy is a sin, something worse.

  • rate this
    +2

    Comment number 1397.

    How many MP's are doing this?

  • rate this
    0

    Comment number 1396.

    Perhaps Jimmy Carrs biggest mistake was to not publicly support David Camerons Tory Party and maybe not slipping the Torys the occasional politcal donation. That way he would of had the blind eye turned instead of being targeted. Jimmy should of taken a leaf out of the Phillip Greene book on how to use friends in high places and get even richer. or maybe he should have just called himself Vodapone

 

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