It has been discovered that comedian Jimmy Carr has been using a legal loophole in order to pay as little as 1% tax on his earnings however is he wrong to have done so or is he just doing what any right minded person would do if they could?
The loophole he has been using is the K2 scheme where you put your money into a Jersey based trust which then lends the investor the money back. The money is classed as a loan it cannot be taxed as it can technically be recalled at any time. While not many people use or even know about it, it is completely legal and it has saved the popular funny man approximately £3.3million.
British Prime Minister David Cameron waded into the equation branding Carr’s scheme ‘morally wrong’, despite him being the recipient of money his father had invested in similar off shore trusts.
Only days after Carr’s tax avoidance scheme was revealed he appeared hosting the weekly Channel 4 panel show 8 Out Of 10 Cats. To his credit he stoically sat through a barrage of jokes from special guests Sarah Millican, Georgie Thompson, Louie Spence and Micky Flanagan as well as regulars Sean Lock and John Richardson. He was even happy enough to make jokes at his own expense.
The zinger of the night came from team captain Sean Lock, who said: “We all like to put a bit of money away for a rainy day, don’t we? But I think you’re more prepared than Noah.”
While the jokes were flying at Carr’s expense, it was still very evident that he was sorry for his actions, and gave the closest thing to a public apology that you are ever going to see on what is essentially a comedy show. He said: “I hate to sound like I’m passing the buck, but I’ll tell you who I blame for this whole mess – me. It’s entirely my fault.”
These have been examples of other high profile stars avoiding tax in a similar way. Take That band members Gary Barlow, Howard Donald and Mark Owen, and the band’s manager Jonathan Wild have invested at least £26million in a scheme run by Icebreaker Management Services, a company that insists it works within the confines of the law.
However despite the Prime Minister’s comments and several scathing articles in newspapers branding Carr ‘disgraceful’ and ‘hypocritical’, other celebrities have jumped to his defence. Little Britain star David Walliams said via twitter “I thought Jimmy Carr handled an incredibly difficult situation brilliantly on tonight’s 8 Out of 10 Cats.” And Jeremy Clarkson’s column in The Sun blasted the PM for making an example of the comedian over such an ‘inane and stupid’ thing.
The public reaction was also quite favourable and Twitter users were keen to show their support to Carr. Thomas Stringer (@Thomas_Stringer) said: “Jimmy Carr used a legal loophole that the government left in. It is his prerogative to use it if he wishes.” And Victoria Coren (@VictoriaCoren) said: “Can I just say this about Jimmy Carr? He is truly one of the kindest, nicest, warmest people I’ve ever met.”
But the long and short of the matter is this: Jimmy Carr works hard, he travels the length and breadth of the country bringing his fresh, edgy and satirical stand-up comedy routine to thousands and thousands of people, hosts and stars in a variety of shows such as 10 O’Clock Live and Big Fat Quiz Of The Year, so why should he not get to keep his hard earned cash. If YOU had the option of saving some money and handing over less to Mr Taxman would you do it? Of course you would!
Whether Jimmy Carr was right or wrong to do what he did, well it’s subjective and as such is open to interpretation, but it must be pointed out that he is an innocent man and he has broken no laws. The legal loophole has been there for years and years, and people have been using it in order to legally pay as little tax as they could. It doesn’t make him bad or even wrong, it makes him money savvy.
So if anyone should be getting it in the neck it should be the government for keeping this ‘morally wrong’ (but entirely legal) loophole open. They knew it was there, it’s not a new scheme, and the whole idea of tax avoidance is as old as taxing itself. Fact. But then again I’m sure plenty of rich and pompous MP’s were too busy avoiding tax to notice.
So what are your views on the story? Was Jimmy Carr right or wrong to use the legal loophole to avoid paying tax? Please leave your thoughts in the comments section below.
Also please take a look at my review of Jimmy Carr’s Laugher Therapy tour HERE!