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Jimmy Carr admits to 'terrible error of judgement' after PM slams tax scheme

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Comedian Jimmy Carr has admitted to a 'terrible error of judgement' in using an offshore tax dodge to pay as little as 1 per cent tax on his multi-million pound income.

The comedian today took to Twitter to explain that he would no longer use the Jersey-based K2 tax scheme and vowed to 'conduct my financial affairs much more responsibly' following widespread anger after his tax dodging was revealed - including a rebuke from David Cameron.

The Prime Minister called the alleged attempts by Carr to avoid tax 'dodgy' and 'completely wrong' in a rare attack on an individual's financial arrangements.

No joke: Comedian Jimmy Carr reportedly puts away £3.3million a year via the K2 tax avoidance scheme

The strong words appeared to have hit home and Carr this morning attempted to explain to his 2.3million Twitter followers how the elaborate tax dodge came about.

'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.”', he tweeted.

The mea culpa came after Prime Minister David Cameron, speaking at the G20 summit in Mexico, 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.'

Twitter apology: Comedian Jimmy Carr was apologetic on the social network site this morning.

Mr Cameron made the comments in an interview with ITV News. He added: '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.'

After details of his tax arrangements were revealed by The Times newspaper on Tuesday, Carr hit back during a show in Tunbridge Wells in Kent last night, saying: ‘I pay what I have to and not a penny more.’

The comedian has come under fire this week for having used a legal Jersey tax avoidance scheme which enables him to pay only 1 per cent income tax.

Carr, who has publicly mocked fat-cat bankers, reportedly puts away £3.3million a year via the K2 tax scheme, which is used by more than 1,000 tax avoiders, to shelter some £168million from the taxman.

K2 works by transferring salaries into a Jersey-based trust, which lends investors back the money. Because the loan can technically be recalled, it is not subject to income tax.

Carr’s lawyers have confirmed his K2 membership but said there was nothing unlawful about managing his affairs in a ‘tax efficient manner’, and that they had been disclosed to the relevant authorities.

Challenged by a member of the Kent audience who heckled ‘You don’t pay tax’, Mr Carr replied: ‘I pay what I have to and not a penny more,’ The Times reported.

Mr Carr spoke out last night while claims emerged that members of Take That - Gary Barlow, Howard Donald, Mark Owen and their manager Jonathan Wild - invested at least £26million in another scheme run by Icebreaker Management Services.

The pop stars and their manager, Jonathan Wild, are among 1,000 people who contributed £480million to 62 partnerships in music industry investment schemes that act as tax shelters for wealthy individuals, according to The Times.

HMRC will attempt to shut down the partnerships at a tax tribunal in November. Barlow – who was recently made an OBE – and his company could face paying back millions of pounds if it is successful.

Yesterday, Cabinet Minister Danny Alexander made a withering attack on the rich who use tax loopholes to reduce their rate of income tax describing them as the 'moral equivalent of benefit cheats'.

He revealed that tax officials are examining the scheme used by Carr ‘with a view to either shutting it down or getting the money back in some other way’.

‘At a time of real economic difficulty for our country, it is vitally important that everyone pays their fair share of tax,’ he said.

‘People who dodge the tax system are the moral equivalent of benefit cheats and we are coming to get them. We are taking steps wherever we can to ensure that everyone pays their fair share.’

A Revenue and Customs spokesman said it had successfully challenged an avoidance scheme run by Icebreaker 1 LLP, winning on the main arguments in the tribunals.

The 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.’

HMRC said the K2 scheme was already under investigation.



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