Comedian Jimmy Carr says he has "made a terrible error of judgement" over using a tax avoidance scheme. In a statement on his Twitter account, Mr Carr said he was no longer involved in the K2 tax shelter. The K2 tax scheme used by Mr Carr is a way of lowering the amount of tax paid. In a series of messages on Twitter Mr Carr 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.
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'. Apologies to everyone. Jimmy Carr. Under the K2 scheme, an individual resigns from their company and any salary they subsequently receive is paid to an offshore trust.
A spokeswoman said: "HMRC are working hard to investigate the sort of scheme that Jimmy Carr had been reported to be involved in to ensure that they are not aggressively avoiding tax, and, if they are, they are closed down.
She defended Mr Cameron's decision to speak out about an individual's tax affairs - in contravention of normal government practice. Business Secretary Vince Cable also backed the prime minister, telling BBC Radio Sheffield he was not prepared to go "through a hit-list of our celebrities" but adding: "We just want people to pay their dues. The Lib Dem minister said he did not use tax avoidance schemes himself and that, as far he knows, no members of the cabinet did either, saying: "We observe the law In the case of flawed schemes it also provides them with a handy list of all of the scheme users.
But the rules are complex, and not all schemes fall into their ambit — Hyrax contended that their scheme was not caught under the DOTAS rules due to a statutory exemption, and told their clients that there was no legal requirement for them to declare it on their tax returns. Having lost the case, they may now have to provide HMRC with details of all of the scheme users, just weeks before the Loan Charge is due to take effect on 6th April.
Any list may include some high-profile individuals, given that the majority of K2 users were seemingly migrated into Hyrax after legal changes rendered the K2 product unusable. The users were then issued with loans from the EBT that were unlikely — but had the potential — to be paid back.
A few tweaks would be made to try to escape the reach of any new regulations, the name and branding would change, and they would then move their clients en masse from the old product to the shiny new brand, with a familiar roster of staff in the background to support them.
The judge noted that some of the directors personally attended the hearing, however. The judge ruled that whilst the previous schemes were certainly relevant, the existence of the previous schemes was not enough on its own to make DOTAS apply to Hyrax: the scheme had to be assessed, as any other, against the criteria laid out in the DOTAS legislation at Finance Act FA Part 7.
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