Jimmy Carr tax apology puts spotlight on tax avoidance industry

Date: Thursday 21 Jun 2012

Comedian Jimmy Carr has certainly taken some good advice, not on tax avoidance but on crafting an apology.

After the revelation in the Times that the comedian made use of the so called K2 scheme to move tax liabilities offshore he announced on social network twitter:

"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 judgment.

"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. Jimmy Carr."

It’s amazing what can happen when your personal tax affairs become legitimate comment for the Prime Minister.

Hearing David Cameron calling you “morally wrong” on the six o’clock news no doubt concentrates the mind somewhat. Whether a Prime Minister should be commenting on an individual's tax affairs is a debatable point, but with Her Majesty’s Revenue and Customs (HMRC) estimating that the K2 scheme alone costs the country £163m a year Cameron probably thought he was on safe populist ground.

According to the Times, the K2 figure is dwarfed by the amount of money wealthy individuals have hidden from the taxman through film financing schemes. The Labour government introduced them in 1997 as a way of helping British film makers but HMRC now thinks the avoidance “risk” could be as much as £5bn.

The difficulty for David Cameron is that many people who are rich enough to put millions of pounds into complicated tax efficiency schemes are also Tory donors.

The party’s former treasurer, Lord Ashcroft, often saw his tax affairs the subject of uncomfortable scrutiny, while Gary Barlow, who campaigned alongside David Cameron during the last general election has himself been associated with "clever" tax planning. Interestingly Downing Street isn’t being drawn to comment on Barlow.

T.S Eliot wrote:

“There will be time, there will be time
To prepare a face to meet the faces that you meet...”

It seems when it comes to tax the wealthy often prepare a different face for the British public and the tax man.

BS

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