David Cameron Brands Jimmy Carr's Tax Arrangements 'Morally Wrong'

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Cameron has lashed out at Jimmy Carr
Cameron has lashed out at Jimmy Carr

UPDATE: Jimmy Carr apologises for "error of judgement" over tax affairs

Prime Minister David Cameron today branded comedian Jimmy Carr "morally wrong" for seeking to avoid taxes.

Media reports of Carr's tax arrangements suggest he is undertaking "straightforward tax avoidance", said the Prime Minister.

And he said it was unfair on the people who pay to watch the comic perform that he is not paying his taxes in the same way that they do.

Speaking to ITV News during a round of TV interviews during his trip to Mexico, the PM 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.

"It is not fair on hard working people who do the right thing and pay their taxes to see these sorts of scams taking place."

Carr is said to have used an aggressive - but legal - tax-avoidance scheme which enables members to pay income tax rates as low as one per cent.

david cameron

Serious matter: David Cameron made his comments to ITV News

The comic, who has famously lampooned fat cat bankers, reportedly protects some £3.3m a year by channelling cash through Jersey-based company K2.

He spoke out over the claims during a show in Tunbridge Wells, Kent, last night, reportedly saying: "I pay what I have to and not a penny more."

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 already under investigation.

It has also been alleged that Gary Barlow, Howard Donald, Mark Owen and Take That manager Jonathan Wild had invested at least £26m in a scheme run by Icebreaker Management Services.

HMRC said they have already successfully challenged an scheme run by Icebreaker 1 LLP, winning on the main arguments in the tribunals.

But Icebreaker Management Services maintained today that they work "within the law".

A HMRC spokesman said: "This type of scheme will fail where there is circular borrowing which serves no economic purpose or which cannot, in fact, be used in a trade.

"We are now preparing to litigate Icebreaker 2 but for legal reasons cannot say more at this time.

"We examine the implementation of avoidance schemes in detail and will not let any aspect of these cases go unchallenged."

He added: "We have taken firm action to protect the exchequer from unacceptable tax loss.

"We 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."

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

However, Icebreaker Management Services stressed that it was operating within the law.

A spokesman for the firm said: "The Icebreaker LLPs are all commercial businesses, in which the LLP members work actively together in order to produce creative and artistic material and generate taxable profits.

"As a result, hundreds of people have been, and can continue to be, employed in the creative industries and large numbers of products have been made for distribution and sale around the world.

"We believe that the Icebreaker LLPs play a valuable part in the UK economy, frequently fostering and supporting creative talent and young people embarking on their careers.

"Icebreaker Management Services Limited recognises the need for the proper administration and collection of taxes, and that it is essential that anyone who seeks to make use of tax relief does so properly and within the law.

"Abuse of the tax system for personal gain is, of course, never acceptable."

Writing in The Sun newspaper, Treasury Chief Secretary Danny Alexander warned stars and others who employ "ever more obscure and underhand" avoidance measures: "No matter how rich or famous you are, we are coming to get you.

"When it comes to paying their fair share, some of the people who can afford it most think they can get away with paying the least.

"Frankly, I think people who dodge the tax system are the moral equivalent of benefit cheats. Both sets of people think they can bend the rules everyone else lives by for their own benefit."

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