K2 Tax Avoidance Scheme and Jimmy Carr
If you came here looking for information about Jimmy Carr or to join the Jersey based K2 tax avoidance scheme then you are about to be disappointed as this blog post isn't really about either of them.
This week saw Dave Cameron show his somewhat hypocritical side on the issue of tax when he branded Jimmy Carr's involvement in K2 as "morally wrong".
Before going further, I'd like to clear up one thing. In respect of tax, anything involving "evasion" is a crime and very naughty. But, anything involving "avoidance" is legal and above board. There are incidents where a scheme is set up to avoid tax, but where it is subsequently found to be in breach of the rules. HMRC can then require payment of the underpaid tax and they usually do so with interest being charged. So, a properly devised and managed tax avoidance scheme that is disclosed to HMRC is perfectly legit.
Given that HMRC are aware of K2 and have yet to indicate that it is anything other than above board you might have been as surprised as I was to hear our Prime Minister accuse somebody involved in a perfectly legal activity of having loose morals. Incidentally, I know that Mr Carr has said sorry for his involvement. Personally, I don't think he has anything to apologise for, but there you are.
Mr Carr is lucky that he is wealthy enough to take advantage of a scheme like K2. But, let's think of situations where you might decide to structure your tax in the most advantageous way possible. Do you own a house? Do you have a will? Did you tell your solicitor to draft the will without any thought as to the inheritance tax implications? I bet you didn't. Are you morally bankrupt?
Let's imagine a hypothetical and really simple situation where Scotland has the power to control tax on petrol. The Scottish government reduces tax on petrol to help Scottish business. Are you morally bankrupt if you live on the English side and cross the board to fill up? Of course you're not. Is Jimmy Carr "morally wrong" to chose to structure his tax affairs in such a way that he keeps as much of his own earnings as possible? Of course he isn't.
Whatever your views on tax avoidance, this outburst is yet another example of double-standards by politicians.
I wonder whether Call Me Dave would now like to denounce Zac Goldsmith (Conservative MP for Richmond Park) for being morally wrong when he took his £200M inheritance, following his father's death, while a non-dom and keeping the bulk of it in a Cayman Island account? At the time, Tory HQ said it was "a private matter".
Until he accepted a Peerage in 2000, Lord Ashcroft was a non-dom and paid no UK tax despite contributing £4M to the Conservative Party. In 2010, Davey C didn't accuse one of his key donors of being morally wrong in the past, he described the issue as "a dead horse" and swept the matter under the carpet.
I know nothing of Mr Carr's political tendencies, but he doesn't strike me as a Tory support unlike Zac and Ashcroft.
Is avoiding tax illegal? Nope. Is it wrong to use legal methods to preserve as much of your own cash as possible? Nope. Does David Cameron criticise everybody who avoids tax? Nope.
This week saw Dave Cameron show his somewhat hypocritical side on the issue of tax when he branded Jimmy Carr's involvement in K2 as "morally wrong".
Before going further, I'd like to clear up one thing. In respect of tax, anything involving "evasion" is a crime and very naughty. But, anything involving "avoidance" is legal and above board. There are incidents where a scheme is set up to avoid tax, but where it is subsequently found to be in breach of the rules. HMRC can then require payment of the underpaid tax and they usually do so with interest being charged. So, a properly devised and managed tax avoidance scheme that is disclosed to HMRC is perfectly legit.
Given that HMRC are aware of K2 and have yet to indicate that it is anything other than above board you might have been as surprised as I was to hear our Prime Minister accuse somebody involved in a perfectly legal activity of having loose morals. Incidentally, I know that Mr Carr has said sorry for his involvement. Personally, I don't think he has anything to apologise for, but there you are.
Mr Carr is lucky that he is wealthy enough to take advantage of a scheme like K2. But, let's think of situations where you might decide to structure your tax in the most advantageous way possible. Do you own a house? Do you have a will? Did you tell your solicitor to draft the will without any thought as to the inheritance tax implications? I bet you didn't. Are you morally bankrupt?
Let's imagine a hypothetical and really simple situation where Scotland has the power to control tax on petrol. The Scottish government reduces tax on petrol to help Scottish business. Are you morally bankrupt if you live on the English side and cross the board to fill up? Of course you're not. Is Jimmy Carr "morally wrong" to chose to structure his tax affairs in such a way that he keeps as much of his own earnings as possible? Of course he isn't.
Whatever your views on tax avoidance, this outburst is yet another example of double-standards by politicians.
I wonder whether Call Me Dave would now like to denounce Zac Goldsmith (Conservative MP for Richmond Park) for being morally wrong when he took his £200M inheritance, following his father's death, while a non-dom and keeping the bulk of it in a Cayman Island account? At the time, Tory HQ said it was "a private matter".
Until he accepted a Peerage in 2000, Lord Ashcroft was a non-dom and paid no UK tax despite contributing £4M to the Conservative Party. In 2010, Davey C didn't accuse one of his key donors of being morally wrong in the past, he described the issue as "a dead horse" and swept the matter under the carpet.
I know nothing of Mr Carr's political tendencies, but he doesn't strike me as a Tory support unlike Zac and Ashcroft.
Is avoiding tax illegal? Nope. Is it wrong to use legal methods to preserve as much of your own cash as possible? Nope. Does David Cameron criticise everybody who avoids tax? Nope.
I don't consider it justifies "call me Dave's" rant but I think the point is that the so called comedian had been lambasting companies for using tax avoidance schemes. Something about people in glass houses I think.
ReplyDeleteSir Phillip Green's companies (oh no sorry, my mistake HIS WIFE's companies) but why does he talk about them as if they are his, perhaps he is a little confused ? A chat to his (his wife's ?) accountant will avoid confusion I am sure.
ReplyDeleteMikey Ashcroft has nothing to do with the UK as apparently he lives in Belize,oh sorry got that wrong, he OWNS Belize.
I wont be calling the **** a LORD !!
I'm afraid the world is full of people like this and a lot of them are in politics.My ideas are:
We pay politicians NOTHING. If you want to "serve" your country you do it for free, and this starts right at the bottom with parish and county councillors,going through to mayors, MPs,Prime Minister, Lords AND No expenses either.
Anyone in politics who is found guilty of any kind of fiddle, dishonesty, corruption, etc whether for £5 or £5M is banned for life from politics.
All politicians tax returns are public records viewable by anyone.
Any person, company, group , business or charity with a profit or turnover of more than £1M must publish in full their detailed accounts and tax returns for public scrutiny.
That should keep the staff at Private Eye busy !
We pay politicians NOTHING. If you want to "serve" your country you do it for free
DeleteSo you're saying you want the country to be run by rich people who can afford to do it for free?
I think if we could opt out of PAYE and get paid by K2 in tax free loans ...we would. The problem is there is a 2 tier system where we at the bottom pay tax, and those at the top don't.
ReplyDeleteUntil we All pay tax without exemption then those that can get away with it ...will be criticized.
I'm waiting for K3 which EVERYONE can join. Then would Dave left with no tax income do something....erm obviously.
We all use tax avoidance schemes. Put your savings into an ISA and you are avoiding tax. Claim tax relief on your mortgage interest payments and you are avoiding tax. Claim tax relief for the purchase of tools for your trade (agreed amount in certain jobs) and you are avoiding tax.
DeleteIt is all just a matter of degree.
Of course, if you give the painter cash for painting your house, to avoid VAT, that is tax evasion, which is illegal.
Like Jimmy Carr, I too would like to apologise for my legal but immoral tax avoidance scheme. I have a NatWest ISA from which I gain interest on my investment without paying tax. I feel so ashamed I am going to withdraw the money and give it to the Indian government to help their nuclear weapon development programme. This is what David Cameron considers a moral investment.
ReplyDeleteSarge, I believe that since he hasn't criticised it, Dave believe that Jersey based tax avoidance schemes are wrong, but ones based in Panama like his daddy used are okay.
DeleteAs for an ISA... you may well be an evil bastard for using one of those! I know I am ;)
is it morally wrong for politicians to waste billions of the tax money on schemes that are badly thought out, ie the fire control centres now mothballed nad costing millions every month.Also all the capitol projects funded through PFI that our children will be paying for forever. If it wasn,t for the likes of you(i assume) and me paying 40% tax there would not be any money for the NHS,Social Services etc.Good luck to any one whoa can legally keep as much of our hard earned cash.
ReplyDeleteyou wrote in this blog post, "The Scottish government reduces tax on petrol to help Scottish business. Are you morally bankrupt if you live on the English side and cross the board to fill up? Of course you're not."
ReplyDeleteDo you think the readers of this post are as stupid as you ? I think most people will spot your wild presupposition there.
Get a dictionary and look up "morals" then ask whether its morally wrong to cross the border in the above example.
IDIOT!
Anon 24 June 2012 - 10.20am, thanks.
ReplyDeleteYou'll note that the line you quoted immediately followed this sentence: "Let's imagine a hypothetical and really simple situation where Scotland has the power to control tax on petrol." So, yes I am sure readers would spot the "wild presupposition" since I pointed it out! Incidentally, it is not a presupposition since I am giving a hypothetical example not making an implicit assumption about the world that I take for granted to be true.
Secondly, I have absolutely no idea what you are talking about when you suggest I, "Get a dictionary and look up "morals" then ask whether its morally wrong to cross the border in the above example." Are you saying it IS morally wrong to do that? I wonder if you could quote the dictionary you are reading? I certainly don't think it would be morally wrong, if you have a different opinion then feel free to explain it. If I am wrong then put me right, I've been wrong before... I can cope.
Finally, I accept that I may be an idiot - it's a charge I would never deny, but you are a fucking moron.
"Finally, I accept that I may be an idiot - it's a charge I would never deny, but you are a fucking moron."
DeleteWhat a fantastic reply!! Good post topped off with the joyously amusing line above.
Are you morally bankrupt if you live on the English side and cross the board to fill up? Of course you're not.
ReplyDeleteYou might be aware of the cross-border shoppers, Nothing 2 Declare, who do exactly that. Recently they've faced criticisms that if not illegal, this is immoral and that by doing so they take trade away from our own dear tobacconists, with an implied side order of 'you should be paying your taxes here, not taking advantage of the lower rates in our EU partner states'.
Interesting, I think, that UKBA are obliquely engaging in moral philosophy. The legal argument looks water-tight to me: there is no limit on tobacco for personal use. He can't sell it or trade it, that's all.
Yep, I've done it myself. First time was in my old Mini Estate, the thing was so loaded down it was literally scrapping the floor as me and my mate came home, the booze still only lasted about two weeks though!!
DeleteIf there is any morality issue with cross-border shopping then it seems to me that the Government must take some responsibility for it by imposing higher taxes than their neighbours. Besides, I've never really understood the argument that you should support your own nation. Physically France is a lot closer to me than Scotland - and unlike the Scottish Government, there is a French Assembly member based for London (well based in London anyway). The people of India are as human as the family who live in the house next door to me. I think that once we start living our lives morally we run into a big old tangled web.
I have absolutely no doubt that in the days when 'popping across the Channel for a booze cruise' was popular, Mr Anonymous 24 June 10.20 would have been one of the first on the ferry with his little white van (no insurance, no MOT and possibly no driving licence)
ReplyDeleteIf I shoplift from one of Philip Greens stores, then give it to charity to sell, where do I stand on the morality argument?
ReplyDeleteAnon, 27 June 2012 21:58
ReplyDeleteThat is a question that only you can answer for yourself.
Legally, you'd be a very naughty boy (or girl).
Its not just those at the top who pick and choose what they pay.
ReplyDeleteDo you really think all the self employed plumbers brickies and joiners pay the full rate?
No they dont at all. actually the main people to take the full brunt are those in full time employment.
If say your a family man earning 70K you pay 40% tax. you have no right to family allowances etc.
2 teachers earning £35K will pay less tax and recieve full family benefits, possibly including tax credits.
If you can pay less you most definaately would.
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