Comedian Jimmy Carr has made the headlines again, but this time it’s not for a contentious joke, instead it’s for his involvement in a tax avoidance scheme. (which he has now left)
Carr was one of 1,100 people who were part of the K2 tax scheme.
The tax-scheme works by customers transferring their salaries into a Jersey-based trust.
The money is then loaned back and because rules say it can technically be recalled, it is not subject to tax.
It means many members pay as little as one per cent income tax on their earnings.
It’s believed the K2 scheme keeps £168million a year away from the Treasury.
Carr has since pulled out of the scheme saying he made a “terrible error of judgement”, after pressure from the media as well as PM David Cameron who called the arrangement “morally wrong”.
Personally I think the reaction to this is justified but the attention shouldn’t be focused solely on Carr, it should be focused on the scheme itself as well as the other 1,000 plus members and the numerous other schemes of this kind.
Tax evasion is a crime but tax avoidance isn’t, so instead of David Cameron saying this arrangement is morally wrong, shouldn’t he change the law so evasion and avoidance are both illegal.
I don’t condone Carr’s actions but I understand why, what would you say if someone came to you and said if you sign up to this scheme that’s completely legal you could pay as little as 1% tax, it would be hard to turn down.
Schemes like this have been up and running for years and it’s almost exclusively those who are better off involved, so the only way stop it is government intervention. (a law change)
This way there would be no arguments or misunderstandings, everybody pays the taxes they should as set by the law and anyone who goes outside that would be prosecuted.
That should also encompass accountants and lawyers who spend their time trying to find loopholes and ways round new laws.
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