David Cameron brands Jimmy Carr’s tax avoidance ‘morally wrong’

HE IS best known for using his rapier wit and biting satire to attack hypocrisy and humbug among politicians and bankers.

But comedian Jimmy Carr yesterday found himself in the unusual position of being on the sharp end of criticism over his own financial affairs, when Prime Minister David Cameron branded him “morally wrong” for seeking to avoid taxes.

Reports of Carr’s tax arrangements had suggested he is undertaking “straightforward tax avoidance”, said Mr Cameron, adding that it was unfair on the people who pay to watch the comic perform that he is not paying his taxes as they do.

Carr is said to have used an aggressive – but legal – tax-avoidance scheme which enables members to pay income tax rates as low as 1 per cent. The comic, who has lampooned fat-cat bankers, reportedly protects some £3.3 million a year by channelling cash through Jersey-based company K2.

He was unapologetic about his tax affairs when he spoke out over the claims during a show in Tunbridge Wells, Kent, on Tuesday night.

It was reported that when a heckler yelled: “You don’t pay tax”,Carr replied: “I pay what I have to and not a penny more.”

He continued: “I’ve not broken the law, I’ve not done anything illegal, but morally, morally.”

Commenting while attending the G20 summit in Mexico, Mr Cameron said: “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.

“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.

Carr is said to be one of more than 1,000 beneficiaries who shelter some £168m from the taxman each year using K2. HM Revenue and Customs (HMRC) said the K2 scheme was under investigation.

HMRC said it has already successfully challenged a scheme run by Icebreaker 1 Limited Liability Partnership (LLP), winning on the main arguments in tribunals. But Icebreaker Management Services maintained that it works “within the law”. An HMRC spokesman denied this was the case.

He said: “We [HMRC] do not accept that the Icebreaker tax avoidance schemes have the tax effects their promoters claim – we have already successfully challenged one Icebreaker scheme in the tribunal.”

The spokesman would not confirm whether or not members of Take That and their manager had been involved in an Icebreaker 2 scheme. Gary Barlow, Howard Donald, Mark Owen and Jonathan Wild have been reported as being among almost 1,000 people who contributed £480m to 62 partnerships in music industry investment schemes

However, Labour leader Ed Miliband said Mr Cameron was wrong in his comments: “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. Instead they are taking the wrong course which, as I say, is cutting taxes for millionaires.”