HMRC have said they are working to "ensure a level playing field for all taxpayers" after reports of a tax avoidance scheme which allows 1,100 Britons to avoid paying £168m per year in tax.
The method, K2, allows wealthy individuals to pay just to 1% income tax, according to an investigation by The Times (£). According to the paper, comedian Jimmy Carr is understood to shelter £3.3m per year as part of the Jersey-based sceme.
Chancellor George Osborne has condemned tax avoidance as "morally repugnant." He told the Daily Telegraph in April: "I was shocked to see that some of the very wealthiest people in the country have organised their tax affairs - and to be fair it's within the tax laws - so that they were regularly paying virtually no income tax. And I don't think that's right."
Jimmy Carr has been accused of hypocrisy
An HMRC spokesperson said on Tuesday morning that the government had "seriously undermined" the tax avoidance "industry".
"This scheme (K2) was already under investigation by HMRC. If as is alleged it depends on the use of loans - it doesn't work anyway - but HMRC is checking. If it does work technically, HMRC will challenge it in every way. T
"There is no way anyone, no matter who they are, is going to get away with paying less than they should," the said.
“HMRC is extremely effective at shutting down tax avoidance schemes fast and effectively. The avoidance 'industry' has been seriously undermined by HMRC’s focus on tackling avoidance – preventing billions of pounds of tax being diverted from the Exchequer."
However according to The Times Roy Lyness, of Peak Performance Accountants who run the K2 Scheme said in an email written after 2012's Budget "most of the powerful tax-saving opportunities survived unscathed."
Comedian Carr has previously mocked tax avoidance in a sketch for TV show 10 O Clock Live, wearing a blonde wig and saying: "Did you hear that in 2011 Barclays made £1.6bn profit globally. Guess how much UK corporation tax we paid.. We pay just under 1% tax. It's amazing. You look impressed."
He went on "why don't you apply for the Barclays 1% tax scam."
A spokesperson for Jimmy Carr declined to comment on the reports, however his lawyers confirmed to The Times his membership of K2.
See below for a slideshow of Twitter users' reactions to the story.
- Did Jimmy Carr Follow His Own Tax Avoidance Advice? (VIDEO)
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