Comedian Carr admits 'terrible error' in tax affairs

Comedian Jimmy Carr today said he had made a "terrible error of judgment" over his tax arrangements.

Comedian Jimmy Carr today said he had made a "terrible error of judgment" over his tax arrangements.

He made the admission after British Prime Minister David Cameron branded his tax dodging "morally wrong".

The comedian released a statement saying: "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 judgment.

"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."

Mr Cameron, speaking last night during a visit to Mexico, joined a chorus of criticism of the comedian, whose tax arrangements were revealed in The Times on Tuesday.

Describing them as "straightforward tax avoidance", the PM 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.

Mr Cameron 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 1%.

The comic, who has famously lampooned fat cat bankers, reportedly protects some £3.3m (€4.1m) a year by channelling cash through Jersey-based company K2.

Carr is said to be one of more than 1,000 beneficiaries who shelter some £168m (€208.2m) 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 (€32.2m) 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 yesterday 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 (€594.8m) 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."

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