Tax Avoidance, Comedians and Morality

On June 23, 2012 by Richard Lartey

Jimmy Carr. Now you either love the guy or you hate the guy. I personally just love his laugh. Now as you probably all already know Jimmy has been involved in the K2 tax avoidance scheme.

The scheme works as follows:

  • UK earners ‘quit’ their job
  • They then sign new employment contracts with offshore shell companies
  • The offshore companies ‘rehire’ their new employee to the UK but take their earnings
  • The offshore company pays the employee a much lower salary each month, but ‘loans’ them several thousand pounds
  • These loans can be written down as tax liabilities, thus substantially reducing tax payable to the Government

(via ITV News)

Now this whole debacle has sparked a number of debates surrounding the morality of such tax avoidance and has seen Jimmy come out and publicly appologise via Twitter:

‘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’

Personally I feel my views on tax dodging slightly contradict themselves, because whilst I don’t on the whole agree with it, I completely agree with what Jimmy has done. If you’re working really hard to make a living especially in a career path like Jimmy’s which has him away from his family for long periods of time and the taxman comes along and demands a substantial amount of your earnings, looking for ways to reduce the amount of tax paid makes complete sense. If you were in the same position could you honestly say you wouldn’t do the same?

It’s immoral not illegal so for the David Cameron to take a dig at Jimmy I feel is completely wrong, and if he doesn’t like what he’s doing he should move to make the K2 and similar tax avoidance schemes illegal rather than bitching about Jimmy to the press. The prime minister has also managed to open up a huge can of worms surrounding other tax dodgers especially those connected to his own Conservative party. Watching this story unfold over the coming weeks will definitely be interesting.

With all that said I do have to say that Jimmy handled the situation extremely well with his latest appearance on last night’s 8 Out of 10 Cats. If you missed it, here it is for you:

As always on my blog your comments are welcome below.

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