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
    0

    Comment number 1435.

    Miliband has reportedly criticised Cameron saying "I don't think it's for politicians to lecture people about morality."!
    Very different comments for bankers "tax those bankers' bonuses so the taxpayer can get something back from what I think is still a bonus merry-go-round."
    But then bankers are possibly not Labour voting 'Champagne Socialists' so that's when double standards are okay Ed?

  • rate this
    -1

    Comment number 1434.

    Could this be Mr Carr’s “Fatty Arbuckle” moment?
    I hope he’s already sorted his pension out.

    For the 1st time, I can actually have a good laugh at Mr Carr.

  • rate this
    +3

    Comment number 1433.

    Not to call our dear prime minister a hypocrite, however, maybe before he sorts out the world of dastardly comedians and their immoral tax avoidance Mr Cameron should begin by asking Sir philip Green where his tax payments are or perhaps give Amazon UK a call and mention the idea to them that they might like to pay tax on the profits they make here. PICK ON COMEDIANS DAVE.

  • rate this
    +3

    Comment number 1432.

    Of course tax "avoidance" should be kept to a minimum. However, if something is legal then why shouldn't someone make use of it? What really is not fair is the fact that the tax authorities keep moving the goalposts - one day something is o.k,the next it is not, even though no laws have changed. We need clear laws that do not need complex interpretation,and consistent decisions,not made up to suit

  • rate this
    0

    Comment number 1431.

    Moderated for speaking the truth about a Tory advisor who no doubt makes substantial political donations, and certainly avoids billions in tax?

    You really should grow a pair BBC!

  • rate this
    +2

    Comment number 1430.

    We are increasingly pushed to stick to the letter of the law (not the spirit). Roman law takes over. Mostly caused by the EU.
    HMRC are using this when it goes against the tax payer. We all know their tactics.

    On this background: Can we blame someone who just uses the same letter of the law in his favour? We should all do this unless the spirit in this country changes for the better- led by HMRC!

  • rate this
    +3

    Comment number 1429.

    Football industry next? - that must be ripe for tax abuse.

    Then publication of the tax large companies pay - allegedly one High Street Chemist pays 3% tax

  • rate this
    +2

    Comment number 1428.

    Dont be Nieve Dont expect the chancellor to close these legal loopholes its what all his paly use.

  • rate this
    0

    Comment number 1427.

    And we wonder why our economy is in such a 'parlous' state!! 'Do what I say, not what I do!'

  • rate this
    +3

    Comment number 1426.

    The tax laws do not have to be changed. !!!

    Just make ALL tax returns open to public scrutiny - as is done in Sweden.

    Then we would find out who ALL the "evaders" and "avoiders" are in a few minutes.

    And who the tax advisors are too.

    This will never happen here because ......?

    because it is not our country anymore it belongs to the crooks and cheats.
    It is morally broken.

  • rate this
    +1

    Comment number 1425.

    He's a greedy bar steward

  • rate this
    +4

    Comment number 1424.

    I am fed up with those avoiding tax and cheating on benefits. If you are employed and taxed PAYE you have no option but to pay fully for everything. People I know who are plumbers and electricians do loads of work cash in hand, do up their houses buying materials and services as 'trade', run vehicles, phones, fuel, laptops, clothes etc as business expenses that PAYE folks pay for from wages.

  • rate this
    +4

    Comment number 1423.

    Well done Jimmy! I think it would be good now for politicians to show their own tax arrangements... Like most big earners, I believe they too are not paying a penny more than they have to - and if that means making use of tax loopholes, then they will.

  • rate this
    +1

    Comment number 1422.

    Gottach you greedy man

  • rate this
    0

    Comment number 1421.

    I think that the fairest way to to tax everybody at the same rate 20% or whatever it is at the time. If this was the case I think that far fewer people would avoid paying but it does seem wrong to tax someone higher because of what they have managed to achieve in life. Also with the higher tax rate all this does is inflate the higher incomes to allow the take home pay to be at the acceptable rate.

  • rate this
    +4

    Comment number 1420.

    Gary Barlow - guilty of his tax arrangements, and the crimes he has been committing against music all these years.

  • rate this
    +1

    Comment number 1419.

    It is just that any one who is not in the PM club should not be doing this sort of thing or the PM will make a song and dance about it
    It would be nice to know how many of MPs and Lords use such systems to aviod tax

  • rate this
    +3

    Comment number 1418.

    Not really Carr's fault that ,this loophole exists.People will use it.What about attacking G Barlow or M Owen.Whats your problem DAVE?Wheres your Morals Dave?

  • rate this
    +5

    Comment number 1417.

    How about we learn from Sweden's example, where there's very little tax avoidance & people are happier then us Brits - tweak the Data Protection Act & publish everyone's tax affairs, then society can shame the spongers who avoid their fair share of tax into actually paying it.......

  • rate this
    +3

    Comment number 1416.

    Downing Street said Mr Cameron and senior ministers were not planning to disclose their tax returns in the "very near future".......
    ......Well until they do, and we "know" they're not doing the same as Jimmy, and others, they shouldn't be criticising

 

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