Tax avoidance: it pays to name and shame

Sunday 24 June 2012

Tax avoidance is no joke, as the comedian Jimmy Carr has discovered.

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Last week, Carr admitted a "serious error of judgment" in using an obscure offshore tax avoidance scheme called K2.

He has been widely attacked by fellow comedians and by social media sites. But his embarrassment will be little consolation to the millions of ordinary tax payers who have no choice but to pay their taxes through Pay As You Earn.

They have put up with bankers continuing to award themselves lavish bonuses even as their banks have been propped up by taxpayers' money; professional footballers avoiding tax through Employee Benefit Schemes; huge companies such as Vodafone paying virtually no tax in Britain; and British businessmen registering themselves as "non-domicile" in their own country in order to avoid having to pay tax on their full earnings. Now we have the further insult of wealthy celebrities employing accountants to devise ever-more ingenious ways of bamboozling the tax man. Our report this week that the already controversial bonus payments to executives involved in Edinburgh's disastrous trams project were paid through an arrangement which make it possible to avoid paying income tax serves only to rub salt in these wounds.These are not trivial sums. Carr was earning £3.3 million a year. By reducing his tax bill to barely 1%, he has saved around £1.5m. This is money that should have gone to pay for schools and hospitals; soldiers and police officers. Carr is a citizen of this country, yet he has avoided paying for the many benefits of living here. This is not a "victimless crime". Tax avoidance is legal theft. Ordinary people will have to pay more tax in order to make up for Carr's greed. It is thought the Exchequer could be losing up to £40 billion a year through corporate and individual tax avoidance, sometimes sanctioned by HM Revenue & Customs itself. This is clearly unacceptable. HMRC cracks down hard on any ordinary taxpayer who fiddles his or her accounts and it should give no quarter to celebrity tax avoiders. HMRC should never have given the green light for K2, devised by the Kirkcaldy-based firm Peak Performance Accountants.It involved Carr channelling his earnings through an off-shore company that paid him in tax deductable loans. Such a device could only be used for the purposes of avoiding tax. One way of dealing with this problem might be to name and shame tax avoiders. Celebrities such as Jimmy Carr, and Gary Barlow of Take That, who uses a similar scheme, should be required by law to post their earnings and the amount they have paid in taxes. Let public opinion do the rest. As Carr demonstrated by making a grovelling apology, these people know they are doing wrong.It's only because they are allowed to hide in the corners that they continue to play the taxpayers of Britain for fools.

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Tax avoidance: it pays to name and shame

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