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Conservatives and Labour trade celebrity blows as ‘Carr tax’ row escalates

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Friday, 22 June 2012 06:04
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By Andrew Barr 
Prime Minister David Cameron has come under criticism for leading personal attacks on comedian Jimmy Carr for tax avoidance whilst refusing to condemn Tory party donors allegedly benefiting from similar schemes.

The political row follows comments by Mr Cameron who said that comedian Jimmy Carr’s use of a tax avoidance scheme in Jersey, whilst legal, was “morally wrong”.

However Labour have hit out at the UK PM claiming that Mr Cameron was being selective in his criticism by singling out the comedian whilst refusing to comment on the tax affairs of Take That star Gary Barlow, a prominent Tory backer.

Labour MP and Shadow leader of the House of Commons, Angela Eagle, criticised the personal nature of the attack on Mr Carr, saying:

"The prime minister rushed to the TV studios to condemn the tax avoidance scheme used by Jimmy Carr but he did not take the opportunity to condemn as morally repugnant the tax avoidance scheme used by Conservative supporter Gary Barlow, who's given a whole new meaning to the phrase 'Take That'.

"If it's all so morally repugnant, why has he just been given an OBE in the birthday honours list?

"Why is the prime minister's view of what's dodgy in the tax system so partial? Sir Philip Green has interesting tax arrangements but far from being labelled morally repugnant in a Mexico TV studio, he's got a government review to head up."

Another Labour MP, Catherine McKinnell demanded that the former Take That star return his OBE if he used similar methods to pay less tax.

Several Lib Dem MPs have also asked questions about the appropriateness of Mr Barlow being awarded the honour last weekend when he had not paid the full rate of tax.

Labour leader Ed Miliband commented on Mr Cameron's comments by insisting that it was not the Prime Minister’s place to “lecture people about morality.”

He said: "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 and I think that is the right course the Government should take.

"Instead they are taking the wrong course which, as I say, is cutting taxes for millionaires."

It is predicted that over 1,000 people use the K2 scheme, sheltering a total of £168 million per year from the UK Treasury.  Mr Carr is believed to be one of the largest beneficiaries of the scheme.

However critics have claimed celebrities like Carr and Barlow are small fry compared to businessmen like Sir Philip Green who ‘avoids’ tax of over £200 million per year through a system that has his wife, domiciled in Monaco, registered as the owner of his business empire.

The row also saw Lib Dem MP Danny Alexander defend the attack on Mr Carr in a BBC Scotland interview.

Mr Alexander, who is chief secretary to the Treasury, reinforced the Prime Minister’s attack on Mr Carr by himself threatening: "No matter how rich or famous you are, we are coming to get you."

However, on Radio Scotland’s Newsdrive program yesterday afternoon, Mr Alexander refused to clarify whether or not UK Government ministers and their own tax affairs would be put under an equal level of scrutiny.

Asked whether he could give assurances that no UK Government ministers have taken part in tax avoidance, a flustered Mr Alexander told Radio Scotland:

“What I can certainly talk about is the policies that the government is pursuing.  I recently for example announced new rules to clamp down on potential tax avoidance in the public sector.

“I think that was the right thing to do. I’m very sorry that the Scottish Government has not yet gone public with its own efforts on that front and I think that they really should do so now.”

Mr Alexander was pressed by interviewer Ken MacDonald again for an answer, this time being asked whether the UK Government would release information in the public interest if ministers had indeed avoided tax.

“People’s tax affairs are confidential,” said the Lib Dem MP.

In a series of messages on Twitter yesterday Jimmy Carr issued a public apology for taking part in the K2 tax avoidance scheme.

In a series of tweets he said:

"I appreciate as a comedian, people will expect me to 'make light' of this situation, but I'm not going to in this statement.

"As this is obviously a serious matter. I met with a financial advisor and he said to me 'Do you want to pay less tax? It's totally legal'. I said 'Yes'."

"I now realise I've made a terrible error of judgement.

"Although I've been advised the K2 Tax scheme is entirely legal, and has been fully disclosed to HMRC (Her Majesty's Revenue and Customs).

"I'm no longer involved in it and will in future conduct my financial affairs much more responsibly. Apologies to everyone. Jimmy Carr."

Hear Danny Alexander being interviewed here:

Comments  

 
# Wave Machine 2012-06-22 07:26
Danny Alexander - "No matter how rich or famous you are, we are coming to get you. Except, of course, for Government Ministers and Tory/Liberal Democrat donors"
 
 
# UpSpake 2012-06-22 07:31
Any country (UK) that labours under a tax code that runs to over 11.000 pages really cannot lecture individuals who find ways to mimimise their tax liability. The massively complicated system simply invites that.
It's all about money of-course. The Treasury wants the tax but cannot see that every year piling more rules and regualtions simply makes it impossible for even the tax authorities to understand their own system.
If it's not illegal for these people to do what they do, then they are not the problem, the system is !.
 
 
# Davy 2012-06-22 07:47
Just a pair of thieves legal or not, they and other people involved in tax avoidance schemes are quite prepared to use the services of their country's', but are not prepared to pay their fair share. Cheap thieves nothing else.
 
 
# Caadfael 2012-06-22 08:28
Aye Davy, but not by any means the worst .. how about this cave-in from HMRC?
www.facebook.com/.../
The graphic puts it into perspective!
 
 
# J Wil 2012-06-22 08:33
It seems like a regression to mediaeval times, where there were the gentry and the serfs.

The present day serfs are ordinary people who pay their full tax liabilities and the gentry are those who are able to avoid tax, by one means or another, legitimised by government.

Mr Carr, it seems, has sought to come clean because his career depends on his interface with the public, but there will be others who can hide behind the fact that their income is not so vulnerable to public opinion, eg politicians, civil servants and TV employees.

It is a double whammy for ordinary tax payers as they are also being hit in these straitened times by an austerity programme that seeks to reduce the national debt, whilst corporations and relatively rich people, who are less affected, or completely unaffected by the austerity, can avoid paying tax which would have helped to reduce the national debt.
 
 
# clootie 2012-06-22 08:43
A dificult topic. Someone saving for old age and contributing additional payments (AVC) is being prudent but taking advantage of a tax avoidance scheme which was designed to encourage such saving. However several fat cats used it to line their pockets.

A couple may chose to marry or live together based on income tax advantage.

How do you define tax avoidance which is OK and that which is not ?

I conider what Carr/Barlow etc did/do wrong but knee jerk law changes may hit the pensioner trying to protect meager savings in a legal tax avoidance fund which are promoted by the government.

Those best able to close these loop holes have been recruited into the tax avoidance industry.

We had the scam a few years ago of large tracts of Scotland being planted with trees - not purely on commercial arguement but for tax avoidance.

Why should I have to pay more tax for "New Trident" instead of social reforms in Scotland - a better arguement.
 
 
# Juteman 2012-06-22 09:00
When folk in the future look back at this moment in time, quite a few names will be added to the 'parcel o rogues'.
Danny Alexander will definately be one of them. I honestly can't understand what motivates folk like him and Moore to work actively against their own countrymen and women.
Is it purely self-interest, or have they convinced themselves they are doing the 'right' thing?
 
 
# border reiver 2012-06-22 09:44
Cameron has opened a can of worms with his outburst, Many Tory MPs, Lords and donors etc must be cringing at his attack on Carr as they will also be up to their necks in it. He has even left the door wide open for an attack on his own family.
dailymail.co.uk/.../...
 
 
# ubinworryinmasheep 2012-06-22 09:46
Labour need to watch themselves here as I believe a certain Mr T Blair has been doing some sort of scheme similar to this one. A large can of worms has been opened thanks to Cameron....idiot.
 
 
# bigbuachaille 2012-06-22 09:53
What a refreshing change on BBC Radio Scotland yesterday afternoon when Ken Macdonald got stuck into D. Alexander, repeatedly harrying him for answers and exposing Alexander's attempts at evading the questions. This contrasts very markedly with the easy ride given this morning by G Robertson to Alexander, where the former failed to probe Alexander on the question of tax avoidance and gave Alexander every opportunity to attack the SNP. The now familiar use of the phrase "the word we are not allowed to use" was fed to Alexander by what almost seemed to be part of a cosily agreed conversation, rather than an in depth interview.
 
 
# Edulis 2012-06-22 09:54
I have to say that all this is pretty rich in the aftermath of the expenses scandal. What about the tax efficiency of house flipping, indulged in by one, Alastair Darling. What about David Cameron himself maxing out on his £400K morgage(interes t paid by the public purse when he had the money in his back pocket for outright purchase).
We hear about the clever accountants devising tax avoidance. What is wrong is the length of time it takes for HMRC to respond.It literally took about 10 years for the forestry scam to be closed down. These schemes are obviously public knowledge. HMRC should be able to close them down as soon as they appear and keep any tax avoidance confined to schemes which serve the public interest such as saving.
 
 
# Angus 2012-06-22 10:31
Its the system that all wrong, not the dodgers, they are within the law, so why does westminster not shake up the tax system?
Maybe these honest morally correct LabServatives have too much to loose?
 
 
# Barbazenzero 2012-06-22 10:55
Agreed. Perhaps CMD and Danny [I might look like Beaker but I'm not a Muppet] Alexander should engage their brains before opening their mouths. Selective naming and shaming will only rebound on them big-time and Lab grandees are no better.

Tax avoidance has always been legal, unlike tax evasion. I suspect the real problem is that tax lawyers and accountants will always be better paid for devising new avoidance schemes than for developing new law to defeat them.

The law was clarified by Lord Tomlin in the HoL in 1936 giving judgement on IRC v Duke of Westminster:
Quote:
Every man is entitled if he can to arrange his affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be. If he succeeds in ordering them so as to secure that result, then, however unappreciative the Commissioners of Inland Revenue or his fellow taxpayers may be of his ingenuity, he cannot be compelled to pay an increased tax.


Widely quoted including www.taxinsider.co.uk/.../
 
 
# Holebender 2012-06-22 11:12
The sheer hypocrisy of the politicians is breathtaking. They make the rules, the rest of us just try to live with them. If there is a legal (i.e. within the rules set by our politicians) way to avoid tax then only a mug wouldn't use it. If the politicians don't like it it is within their power to change the rules.

And if anyone here feels inclined to moralise about tax avoidance I have a simple question for you; do you have an ISA? If you do you are legally avoiding tax on your savings.
 
 
# ubinworryinmasheep 2012-06-22 12:58
Well I don't have an ISA but even if I did there's a big difference between going into a bank and getting a good deal than setting up a company in a tax haven and loaning yourself money to deliberately avoid tax. The amounts saved are vastly different with the rich saving the most.

I read somewhere lately that the reason there are vast numbers of poor people in the world comes down to 3rd world countries being ripped off of valuable taxes by multinational companies and depriving the country of income. I believe that to be true and it needs to be stopped. I remember Alex Salmond on I think it was the 1 show and he said that he's all for stopping tax evasion but its a world wide problem that no single country can stop. I hope this situation just now escalates into something much bigger but it probably wont as there's plenty of other rubbish away to take up the medias attention...Olympics etc.
 
 
# Edzell Blue 2012-06-22 14:35
Holebender,
The real answer to your question is that the interest on ISA’s (and their predecessor TESSA’s) has never been subject to tax so you are not avoiding paying tax. These schemes were set up originally to encourage the public to save more. What your answer equates to is that we are all avoiding paying VAT by buying fruit rather than chocolate because chocolate is vatable but fruit has never been subject to VAT. I do realise that this is somewhat facetious but ISA’s etc were originally intended to encourage new savings and to a certain extent they were successful.

The whole tax system needs to be looked at and simplified because there will always be people who will try to avoid paying tax but there are also many other things that need looking at too. I have and ISA that pays 3% interest but the same bank gave me an indicative loan quote on their website where the interest rate was 9.9%. Thankfully I do not need a loan but the difference in rates really needs to be looked at and especially when the banks are getting the cheap money from the BofE.
 
 
# Holebender 2012-06-22 15:23
Sorry, can't agree. You are perfectly at liberty to open a savings account with any bank and pay tax on the interest they pay you, but if you open an ISA you are legally avoiding paying the tax you would otherwise have to pay on the growth in your savings.

Any sane rational person would avoid paying taxes whenever it was possible. Otherwise you are unnecessarily propping up the wastrels of Westminster.
 
 
# Dundonian West 2012-06-22 13:26
Danny Alexander blustering his way through an interview trying not to upset many of his friends/partners in the Tory/LibDem Party/Government,or rich donors/friends in the Labour Party opposite.
Doesn't convince me-----he is not the boss.All the Cabinet outrank him ----only called in to Cabinet when UK finances are being discussed.
Appointed way beyond his level of competence,and really should have remained on the back benches.
However,I'll put this radio interview on to my other sites
with a photo of Mr Alexander----just hope the BBC doesn't come for me!

Addendum. Danny,don't go if No 10 or Milliband's office 'phones saying they'd like a wee word with you stat(um).
 
 
# Soloman 2012-06-22 13:32
The whole attack from Cameron certainly takes the heat away from Ms Brooks appearing in court and his relationship with her and the Murdoch empire. Let the HMRC deal with these issues and if Cameron doesn't like what's going on then he should change the law!
 
 
# J Wil 2012-06-22 14:08
Cameron said before that he wanted to sort out the tax problem. Is his outburst a deliberate attempt to get the public on side when he brings forward legislation and starts to upset his own party colleagues and supporters? Naw! That would be a step too far for him.
 
 
# rhymer 2012-06-22 15:15
My celebrity tax avoiders are
better than your celebrity tax avoiders ?

Wow ! Isn't Westminster politics fun,
not relevant but fun.
 
 
# tilly 2012-06-22 15:21
Danny Alexander: ‘People are using the rules to simply reduce their tax bills and we will change the rules to get the money back.’
That’s one of the most stupid statements I’ve heard from a politician.

I’m no accountant or tax lawyer but Alexander seems to be saying, if someone follows the rules as laid down by HMRC but HMRC then decide to change these rules and apply them retroactively in order ‘to get the money back’ they will do so.

I think Danny Alexander is trying to convince himself - he certainly wouldn't convince any court in the land.
 
 
# jim288 2012-06-22 15:47
The arrangement used by Jimmy Carr falls into the category of an artificial tax avoidance scheme and the Revenue have made it clear that they may apply retrospective legislation to such schemes. There is usually a two pronged attack on the schemes. First the HMRC take the scheme to court and at the same time they will amend the legislation. Sometimes they wait until the result of the court case to bring in the legislation.

Nowadays the Revenue is aware of such schemes from the time they are first promoted.

If you want a little bed time reading take a look at HMRC "Guidance on the disclosure of Tax Avoidance Schemes"

hmrc.gov.uk/.../guidance.htm

Here's an excerpt from it:

2.1
Objectives
The objectives of the disclosure rules are to obtain:

early information about tax arrangements and how they work; and

information about who has used them.
2.2
The effect of disclosure
On its own the disclosure of a tax arrangement has no effect on the tax position of any person who uses it. However, a disclosed tax arrangement may be rendered ineffective by Parliament, possibly with retrospective effect."



Anyone going into these schemes is paying substantial sums of money to the promoters with no guarantee of success. The risks are clearly spelt out and no one should be under any illusion as to the type of transaction they are entering into and the risks involved.

From my own experience most accountants and lawyers are reluctant to be involved with these schemes and only do so if their clients insist.
 
 
# Cattanach69 2012-06-22 17:40
Idiotic Punch and Judy show!Tax avoidance isn't illegal. It might be that Tax Evasion is! However was this err tax avoidance done under Tax Legislation drawn up the Masters of Economic genuis Brown and Darling? And thus under Labour Party laws designed to allow its donors to avoid tax legally?
 
 
# Siôn Jones 2012-06-22 17:57
What about Vodaphone and Boots. Cameron?
 
 
# sid 2012-06-22 19:23
sion, the last I heard is that Boots or to give it it's correct title alliance/boots is owned by a venture capitalist and has branches and distribution networks all over Europe far more alliance branches than boots.
Sid
 
 
# Angus 2012-06-23 02:06
The whole system is corrupt, W/mintster is the boss of the tax system, they made the rules, why are they complaining?
 
 
# cokynutjoe 2012-06-23 08:05
Can taxscam cash be clawed back posthumously?
Cameron's pater had his money stashed overseas apparently.
"Pots & Kettles" rattling away on the hob here.
 
 
# scottishwatersnotforsale 2012-06-23 16:59
Perhaps I missed something but with the Leveson enquiry in the background, who broke the story about Jimmy Carr/Chris Hoy?
 

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