Carr tax 'morally wrong', says PM

Comedian and presenter Jimmy Carr on stage during the Diamond Jubilee concert at Buckingham Palace on June 4, 2012 in London. He has since been criticized for using a scheme to avoid paying tax.

Story highlights

  • Revelations have been made that a British comedian has been using an elaborate scheme to avoid paying tax
  • The British PM David Cameron has branded the tax arrangements "morally wrong"
  • Jimmy Carr, the comedian, has apologized for his "terrible error of judgment", saying he is no longer involved in the scheme
  • The Labour Party has criticized Cameron for singling out Carr
David Cameron, prime minister, on Wednesday branded the tax arrangements of comedian Jimmy Carr "morally wrong" after press reports that he was one of a number of celebrities using elaborate schemes to avoid paying tax.
The comments followed revelations that financial arrangements used by Mr Carr and investments by members of the pop band Take That are being investigated by Revenue & Customs.
The prime minister struck a populist note over the issue during a round of television interviews in Mexico on Wednesday, saying the comedian's investments appeared to be "very dodgy".
Mr Carr on Thursday issued a public apology for his "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," he said in a statement.
Meanwhile, Mr Cameron's rhetoric has drawn accusations of hypocrisy from Labour. Just before the general election it emerged that Lord Ashcroft, a Tory donor and former deputy chairman, had enjoyed "non-dom" tax status, and so did not pay UK tax on overseas earnings.
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Simon Danczuk, a Labour backbencher, said: "Everyone should pay their tax but it is a bit rich for the prime minister to single out Jimmy Carr when he has friends like Lord Ashcroft," he said.
Mr Cameron's comments risk a repeat of tensions earlier in the year when the prime minister's tough stance against bonuses at Royal Bank of Scotland annoyed many Tory donors and supporters.
The controversy over alleged avoidance by entertainers -- triggered by reports in The Times newspaper -- reflects increased public focus on the tax affairs of wealthy individuals and companies at a time of fiscal austerity.
Revenue & Customs said: "HMRC [the Revenue] is extremely effective at shutting down tax avoidance schemes fast and effectively."
George Osborne, chancellor, announced new weapons to combat avoidance schemes in the Budget including a general anti-avoidance rule and new limits on loss relief, in a move that targets some of the most common structures used by the wealthy.
Danny Alexander, chief secretary to the Treasury, yesterday reinforced the coalition's tough anti-avoidance message by warning: "No matter how rich or famous you are, we are coming to get you."
He wrote in an editorial in The Sun newspaper that "people who dodge the tax system are the moral equivalent of benefit cheats".
Asked if Mr Cameron was "disappointed" by reports about the tax affairs of Take That band member Gary Barlow -- who was made an OBE in the Queen's birthday honours at the weekend -- Downing Street said: "The jubilee celebrations were a great success and Gary Barlow played a big part in that."
"I am not going to comment on individuals in terms of what's happening in a newspaper report," it added.