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Jimmy Carr-1%

Jimmy Carr-1%

Didn't find your answer?

I have just read the article in the Daily Mail

I have not been invloved in such schemes for a long time but I presume that :

1) The legal and accountancy fees are high

2) they come with the usual health warnings

Many thanks for any thoughts

Replies (40)

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By taxhound
20th Jun 2012 12:24

I don't like these schemes and would not push them but....

If they are legal, then instead of complaining about those involved being "worse than benefit cheats", Danny Alexander needs to find a way to close them and stop complaining.

Am I worse than a benefit cheat because I use my ISA allowance or trade through a limited company paying myself only a small salary?

When does tax planning stop being sensible and start being "bad"?

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By andy.partridge
20th Jun 2012 15:19

It didn't take long for the establishment to retaliate after Jimmy Carr's ungracious performance at the Jubilee concert. He should have seen it coming.

Perhaps he will stop satirically criticising Barclays tax arrangements now?

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By Craigie_Bhoy
20th Jun 2012 13:07

I'm with taxhoun don this one.  Where is the line between scum of the earth and doing all you can (legally) to reduce your tax bill?

For me, until the powers that be close the loop holes - people are perfectly entitled to arrange their affairs in any (legal) way they want.

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By James Hellyer
20th Jun 2012 13:13

Commercial reasons

There are commercial reasons for trading through a limited company (limitation of liability, some people take company's more seriously, etc). What's the commercial reason for putting your assets in an offshore trust and loaning them back to yourself?

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Replying to lionofludesch:
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By listerramjet
22nd Jun 2012 10:58

doh

tax is a cost, this reduces tax.  Not too difficult to work out!

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By Jeeves
20th Jun 2012 13:24

Commercial reasons

While, of course there are commercial reasons for trading thorugh a limited company, I'd suggest many incorporate purely for tax reasons, and surely we all advise on that regularly (or we wouldn't be serving our clients as we should). While of course the vast majority enter tax-planning schemes for the tax benefit, there can also be commercial reasons for doing-so eg improved cash flow (actually one of the main benefits of the K2 strategy which was highlighted in The Times article is the removal of IR35 / status risks for contractors).  I'm not suggesting that I approve of such schemes (actually I can't make-up my mind on them), but neither do I believe it's an entirely black & white issue.

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By ireallyshouldknowthisbut
20th Jun 2012 13:32

.

"I just read an article in the daily mail"

Doesn't bode well, but its just the K2 scheme. Its a variation on the EBT schemes which promoters have been flogging for year but the ahem, "bright" sparks in the treasury still cant seem to kill off properly.

I have been advising against clients using this or similiar for some time as its all going to end in tears.  Bit like the stamp duty schemes, anything you can see on google you just dont do.

btw I avoid tax like crazy, my wife and paid an average rate of tax of only13.8% last year on our income, that's newspaper maths of course.

 

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Replying to Tim Vane:
By George Attazder
20th Jun 2012 13:30

I've seen things...

ireallyshouldknowthisbut wrote:

"I just read an article in the daily mail"

Doesn't bode well, but its just the K2 scheme. Its a variation on the EBT schemes which promoters have been flogging for year but the ahem, "bright" sparks in the treasury still cant seem to kill off properly.

I have been advising against clients using this or similiar for some time as its all going to end in tears.  Bit like the stamp duty schemes, anything you can see on google you just dont do.

 

... on Google images that I'd quite like to do!

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By twj4789
20th Jun 2012 13:44

I'm with tax hound

I have a strong dislike of these schemes, they all end in tears but outside of that there is something morally wrong. I have dealt with clients who have or do live offshore mainly for tax reasons, but these schemes using a "loan" to cover the income really doesn't sit well.

Outside of that, as a firm it isn't the kind of work we would look to engage in. Whilst the fees are high, once you have set a scheme up for a client eventually it will get closed down and we would be expected to find another one straight away!

We always help our clients to be tax efficient, using any legal means available and that is our responsibility as a firm. We also assist clients where there are commercial reasons for their corporate set-up as sometimes these reasons outweigh the tax benefits.

On the otherhand, if I was in a career such as Jimmy Carr, where at somepoint I may become "old news" I would want to keep as much as possible as the income is no where near certain for the future!

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Teignmouth
By Paul Scholes
20th Jun 2012 14:21

If something smells

I know that smell is in the nose of the inhaler (I'll use that one again) but there are a sufficient number of noses complaining at this one from all quarters to give some chance, at last, that it will be blocked and stay blocked..

I agree it's not easy sometimes to draw a distinction between what is and isn't "aggressive" avoidance and I actually still have a nagging problem with the Ltd Company thing, even though I use it myself & for many of my clients, but with the infrastructure & costs involved with K2, this is clearly in a different league.

The distinction can be drawn by asking for someone's take on tax, ie is it more in the realms of an unnecessary overhead that you want to pare to the bone or do you regard it as an obligation commensurate with living in a relatively safe & secure community?

Not sure about Jimmy Carr's take, maybe it's somebody else's responsibility (eg his accountant) but I seem to remember he had a business life before comedy (with a small c) and so maybe he does feel he has an obligation to get away with whatever he can? 

twj4789 gives him the benefit of the doubt, being in the business he is in, but asking all of my  clients whether they would need more than a few months at £3.4m pa to feel secure for the rest of their lives, I think I know what the answer would be.

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By bencooper
20th Jun 2012 14:37

Let's face it...

...we dont like these schemes because we dont have enough cash of our own for it to be of benefit ourselves and so our 'dislike' is actually jealousy - I dont mind admitting that.

As per usual though I am absolutely 100% sure that the owners, editors and contributors to the Daily Mail are all squeaky clean, church going, law abiding citizens whose tax is bang up to date - which puts them in prime position to dig into others affairs.

As for Jimmy Carr, the bloke is hillarious and maybe some of the AW community could do with letting their hair down and going and having a good giggle at one of his shows!

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By cparker87
20th Jun 2012 14:41

.

Can't see a problem with it, the rules are there in place and it is right that a taxpayer can arrange his/her affairs in the most tax efficient way.

The commercial reasons argument doesn't wash.. Tax is a cost. Reducing it to enjoy increased net cash is a commercial reason.

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Man of Kent
By Kent accountant
20th Jun 2012 14:46

Old news

...it's Take That today...

...keep up ;o)

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Teignmouth
By Paul Scholes
20th Jun 2012 15:03

Speak for yourself Ben

I know, you clearly did, but just to balance it, there is no way I envy that sort of stuff, I have enough for me & mine and that's great.  Rather than jealousy I sense the smell of greed, not nice.

Neither do I get his comedy, doesn't turn me off just probably goes over my head or under my feet, or maybe it's just that he reminds me of Captain Black who used to scare the stuff out of me as a kid http://www.youtube.com/watch?v=bV8YbLvGrb0

Heard him interviewed though when he didn't have an audiance and seemed like a nice bloke.....but don't look into his eyes.

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By andy.partridge
20th Jun 2012 15:18

Opt out

If Jimmy Carr wants to opt out of all those services that taxpayers in this country tend to fund then I think he has a perfect right to.

That is what he intended, isn't it, or have I missed the point?

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Replying to lionofludesch:
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By listerramjet
22nd Jun 2012 11:06

did you miss the point

or did you just make your own point up? 

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By ShirleyM
20th Jun 2012 15:33

Greed and lack of responsibility

Like Paul, I think it smacks of greed and the selfish attitude seems to be ... 'I'm alright, so let someone else care about (and pay for) the country and it's citizens'.

Others pay the bills, even if they earn less, but the dodgers will still want the benefits.

 

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By Steve Holloway
20th Jun 2012 15:42

I'm with Paul (which is an odd feeling) ....

Don't get Jimmy Carr in the slightest and I certainly don't envy him his money. I have the same view on rich people who avoid tax in this way as I do companies who sack their staff and outsource to India ... all fine just as long as you go and live / operate where you have gained the benefit. Having it all ways is just greedy.

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By newmoon
20th Jun 2012 22:52

Isn't the government getting close to inciting moral panic?
It seems to me that the government, or some elements of it, are getting very close to inciting a moral panic against law abiding citizens who do not measure up to there particular moral interpretation.
In the past such behaviour has led to witch hunts.
Do you think this is the way to go, and what happens if a vigilante group takes matters into their own hands? Does that sound far fetched?
A few weeks ago it was the givers to charity that were avoiding tax.
Where does it end?
Regardless of one's views on so called aggressive tax avoidance isn't it the government's job to legislate, and ideally create the environment where there isn't even a market for tax avoidance schemes?
On a different note, how have the names of individuals been obtained by the press I wonder?

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By coolmanwithbeard
21st Jun 2012 06:52

confidentiality?

I'm not a fan of these schemes either - but ultimately if the rules say it can be done then it's up to the legislaters to do a proper job of sorting it out, 

 

However as I understand it, it is newspapers that have highlighted these schemes and the current persons using them - I assume for the government to comment they will have checked the facts (that such a scheme is in place) with HMRC which leaves me wondering where is taxpayer confidentiality - if they haven't checked then is it right for them to engage in tittle tattle rather than the more professional not talking about individuals. As with many things this government is showing its usual good judgement.

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By Paul Soper
21st Jun 2012 08:38

Disguised remuneration

I have made this comment elsewhere but why reinvest the wheel...

It is surprising tin press comments on the so-called K2 scheme, used by Jimmy Carr and others, that no mention has been made of the disguised remuneration rules which would seem to counteract this scheme, in fact may well have been designed to catch this scheme specifically.  One feature of the K2 is resigning from a previously held position, and disguised remuneration is aimed at employees PAST, present and future, a third party, the new offshore employer takes a relevant step, the loan to the employee, which is paid in connection with a tax avoidance scheme or arrangement, it is clearly intended to be a non-recourse arrangement and it is reasonable to suppose (the wording of the legislation) that the sums are intended to represent remuneration.

I'd have thought HMRC would have been saying "GOTCHA" in large letters rather than allowing journalists, broadcasters and members of the public to complain that they have taken no action to clamp down on avoiders.  Naturally the proposed new GAAR, the general anti-abuse rule, should catch this sort of arrangement in the future.

Have the promoters of K2 spotted a genuine loophole in the disguised remuneration rules?  If so shouldn't prompt action be taken to close it?  Given the failure of many artificial film schemes recently I'd not be surprised if today's revelations (which I haven't read yet) are similarly already caught...

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By blok
21st Jun 2012 08:39

.

cant wait to see the next episode of 8 out of 10 cats!

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By thomas
21st Jun 2012 09:30

Perhaps HMRC should make their next project to investiage the top 500 earners in the UK, see how much tax they pay and close each loop hole (and leave the plumbers and electricians alone!). It seems too easy for these people not to contribute.  Its not fair or equitable. At the end of the day, the UK is skint, we need the taxes to provde better for those that have very little.

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By neileg
21st Jun 2012 09:44

Not black and white

I have two issues with this debate.

This first is that all governments use the tax system to incentivise certain actions and penalise others. This sets a precedent that by changing how your affairs are arranged you can pay more or less tax and be completely within the law. It is then not a matter of principle but more a matter a question of how far you want to go to minimise your tax bill. If we want a truly moral tax system, then governments should stop using it to modify taxpayers’ behaviour.

The second is about how you assess what is a fair amount of tax. I have modest earnings so I pay about £6k per annum in tax. If Jimmy Carr is paying 1% on £3.4m, then he’s paying £34k in tax so he’s paying more than 5 times what I pay but he gets the same police force, the same hospitals and the same subsidised arts events that I get. Is it the proportion of your income that makes it fair, or the amount of tax you pay? I’m not so sure about that.

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By Chris Smail
21st Jun 2012 10:04

Is this about GAAR

Given that the ship of state is the only ship known to leak at the top is it not possible that this is a Treasury or Cabinet Office initiative to help really ill thought out legislation slip through easily on a wave of public support?

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By justsotax
21st Jun 2012 10:53

no problem with him using

these type of legal schemes....but perhaps when he is next doing his observational stand up routine on the UK he should avoid complaining about the state of the streets, police, youth of today etc etc as he appears to have made his choice in respect to contributing to the UK society.

 

@neileg - in answer to your question you first have to ask yourself what type of society do you want to promote......

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Replying to memyself-eye:
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By neileg
21st Jun 2012 11:10

Exactly

justsotax wrote:

@neileg - in answer to your question you first have to ask yourself what type of society do you want to promote......

That is the point I was making. Do you use a poll tax approach where everyone pays a similar amount or do you use a progressive system where the more you earn, the more you pay? The problems is that by the government using the tax system as a lever on behaviour you end up with neither.
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By jaybee661
21st Jun 2012 11:02

If clients are given a choice, what are they going to do?

So if the accountant says to a client 'OK, you have two choices, you can pay a large amount of tax or pay none - which would you prefer?' I wonder what the answer's going to be?

If these schemes are legal why doesn't the government concentrate on closing them?

It's funny how the government think these schemes are so 'morally corrupt' yet obviously claiming taxpayer's money for your moat, or employing your wife on a vast salary to do nothing, or claiming for a second home which you have never even visited, is perfectly acceptable - and would probably still be going on today if it all hadn't been exposed...

I say good luck to these people using these tax schemes and, all the time they're legal, people are going to take advantage of them.

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By B Adder
21st Jun 2012 11:17

Be fair to Govt

They are consulting on allowing some of the rest of the great unwashed  to even the scores with cash accounting - how many of your smaller clients, do you think, will resist keeping their fingers out of the till when they no longer need an accountant  ?

 

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By justsotax
21st Jun 2012 11:23

I suspect most just one some level

of fairness.....with a pinch of encouragement to those who are providing more than just an income for themselves but are also providing work etc for the economy.  

 

I just wonder if Mr Cameron will ever live down the 'we are all in this together' statement.....because quite clearly some of us are more in it together than others....

 

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By djbrown
21st Jun 2012 11:45

Might be an idea...

...for Cameron to look round his Cabinet and ask how many of them are paying morally appropriate amounts of tax.

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By Steve Holloway
21st Jun 2012 14:57

The highest court in the land ...

is clearly that of public opinion. For years MP's inflated their expenses and most of them did so within the lax framework of the prevailing rules which is no better or worse than Alan Carr et al. BUT often in life it pays to at least treat a middle ground between what is possible and what you would feel comfortable defending to your friends and neighbours. He is, after all, also at liberty to sleep with 16 year old school girls and to perform the function of an escort to Russian Oligarchs but I suspect he steers clear of those activities too! (Heat readers - feel free to update my naivety). 

 

 

 

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By bencooper
21st Jun 2012 15:08

Cameron - Whiter than Daz?

I have to say that when I saw David Cameron lecturing about moral right and wrong I was disgusted.

We're on his watch and he is the legislator. If he doesn't like it he should legislate against it, but please, do not rely on moral compass to guide people where money is concerned. As this post proves, when you ask the people what they believe you will always get a real mix of opinion and morals - not saying that anything written above is right or wrong you understand.

Therefore you cannot rely on the moral compass of the individual.

Two key points above:

How many of his cabinet chums and donors fall foul of this? When the answer is 0 I will support the moral outrage, wholeheartedly.I really like the point about 1% of a shed load is probably more than the rest of us pay so is it the % or the value that is wrong?

...and Paul Scholes - Is it wrong to envy someone for being at the top of their game and being remunerated handsomely for it? Is Jimmy Carr not just a one man business which generates huge amounts of income for other businesses; such at the venues he performs at and the retailers that sell his gear.

...and would I like an extra (legally earned) pound or two in my pocket - absolutely and I dont care who knows it! Yes I am comfortable, but would I like to put more away for retirement or my children? - YES. Please, what is wrong with that?

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By ShirleyM
21st Jun 2012 15:42

What is wrong ...

The morals and the 'wrong' part come from expecting others to pay extra to make up for your tax savings. The country cannot be run on fresh air and promises.

If you don't want to live in the UK, then fair do's. If you do want to live in the UK, then you should be prepared to pay towards the running of the country IF you are lucky enough to be able to do so.

It is a bit like wanting to pay no rent. That is fine if the landlord chooses to suffer the shortfall himself, or kicks you out for non-payment, but not if he forcibly increases the rent of everybody else (who DO pay their rent) to make up for the shortfall!

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By justsotax
21st Jun 2012 16:09

Its like you read my mind Shirley...

I would just add, that as a collective it is the millions of ordinary tax paying folk that ensure there is enough money to provide a police service etc....it certainly isn't down to a couple of hundred thousand of the riches who choose to pay 1% of their income and then bemoan that fact.

 

The door is over their...shut it on your way out if you are not happy.....clearly Jimmy felt otherwise as it seems he has removed himself from the scheme....

 

 

 

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Teignmouth
By Paul Scholes
21st Jun 2012 16:17

Inequality again

Ben (you can call me Paul) "is it wrong to envy someone?" bit of a no brainer that one.  In both its common use and in the way in which some use it to paint someone who complains about imposed inequality, damn right, it's a trait most will steer clear of if they want a fulfilling live.

Painting someone with the politics of envy is a cheap get out and one that is used frequently on this site and elsewhere when anyone speaks out against something that unfairly favours one person or section of society over another.

I would still complain about K2 if it was available to all of us, the fact that only the wealthy are able to afford the fees suddenly makes me envious?  I think not.

The debate over someone's earnings potential is purely a matter of opinion, I don't blame JC or say a footballer for following a career where they can make millions, but when those sums reach these sort of proportions compared to others who work just as hard or, dare I judge, are of more use to society, then my nose complains.

The other cheap get out in this sort of debate (and yes you fall into it again) is to say that all these high earners are needed because of the other businesses (and usually employment) they support.  For the best part 6,000 - 10,000 years the vast majority of people who accumulate wealth, & the power that comes with it, do so for themselves.  Greed is hard-wired into many of us, as is the envy connected with it, doesn't mean it's right or that we shouldn't use out intelect to control it.

 

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By JC
21st Jun 2012 16:17

Greece ...

Are we missing something here or did a great many taxpayers in Greece opt for not paying tax - which maybe partially due to their current predicament

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By justsotax
21st Jun 2012 16:31

@jc...yup....

and look what they have had riots/instability/many poor-unemployed etc etc....is this the type of society we want....oh and i just wonder in those conditions how many seats Jimmy would fill (or how many dvds he would shift)....

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By andy.partridge
21st Jun 2012 17:17

Conclusion

The morally bankrupt engaging in activities to ensure the financially bankrupt stay that way and at someone else's expense

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By Stalytax
22nd Jun 2012 11:53

Casting the first stone

Huge tactical error by 'call me Dave' to get drawn into commenting on any individual's tax affairs. 

Two words, DC, 'Lord', and 'Ashcroft'. The PM is already rowing back from a  ‘running commentary’ on people's tax affairs when the name Gary Barlow comes up. Glass houses and stones come to mind, as does John Major's 'back to basics' campaign.

If it's happening on this Government's watch, it's their responsibility. In the meantime it's going to be open season for journalists inquiring into the tax affairs of Government ministers. When DC laid into Carr, somewhere a Government minister or donor who uses the same or similar tax arrangements will have been doing a face palm. Now its coming out that daddy Cameron's millions enjoyed extensive foreign holidays. 

You couldn't make it up.

 

 

 

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