Last week David Cameron picked out Jimmy Carr as one of 1000 people using the K2 tax scheme by branding Carr’s tax arrangement as “morally wrong”. The K2 scheme is based in Jersey and is understood to protect £168m from HMRC every year, with Carr as its largest beneficiary. HMRC is now investigating the scheme but there is no suggestion that the comedian’s actions are illegal. Is Cameron right? Is tax avoidance morally wrong?
Jimmy Carr made the following statement on Twitter after Cameron’s revelation:
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, I’m no longer involved in it and will in future conduct my financial affairs much more responsibly. Apologies to everyone.
I think that although people have been very quick to judge Carr, many would find it difficult to resist such a scheme if their accountant offered it to them. Carr let the panelists on 8 Out Of 10 Cats mock his predicament and did so with good humour.
I would argue that we should not blame people like Jimmy Carr – most people would pay less tax if they could. It is the system that should be blamed for allowing legal loopholes to develop. Having said that, if the K2 scheme is shut down, no doubt another scheme will pop up exploiting a different loophole.
It also emerged this week that Gary Barlow and two other members of Take That have invested over £26m in a music industry investment scheme believed to be another way of avoiding tax. However their lawyers have stated that they still pay a significant amount of tax. Again, the scheme they are involved with is totally legal.
Although I said that we should not blame these individuals it is disappointing that Gary Barlow, who has been greasing round the Royal Family in recent months, is avoiding paying the tax that pays for the monarchy. Jimmy Carr also took part in the Diamond Jubilee Concert.
I think Cameron went a bit far saying that what Carr did was immoral. He is on dodgy ground because many Tory party donors are involved in similar schemes. His and George Osborne’s priority now should be to close up these loopholes so these schemes are no longer a legal option.