COALITION ministers yesterday lashed out at tax dodgers after it was alleged thousands of wealthy people in Britain, including celebrities, paid as little as 1% income tax by using "below the radar" accounting methods.
Her Majesty's Revenue and Customs confirmed the Jersey-based K2 tax avoidance scheme, which supposedly used legal means to shelter £168 million from the Exchequer, is being investigated.
It was suggested that the scheme worked by transferring salaries from mainland investors into the Jersey-based trust, which then gave the money back to investors in the form of loans, which are not subject to income tax.
An HMRC spokesman stressed that the K2 scheme was already under investigation.
He said: "If, as is alleged, it depends on the use of loans, it will not work.
"HMRC are looking into this."
He added: "If the scheme does work technically, HMRC will challenge it in every way available.
"Government does not intend that anyone, no matter who they are, is going to get away with paying less than they should."
One accountant, using a tax avoidance scheme, claimed that he could cut a hypothetical tax bill from £127,000 to £3500 using legal methods, resulting in a tax rate of 1.25%.
"It's a game of cat and mouse. The Revenue closes one scheme, we find another way round it," he was quoted as saying.
Danny Alexander, Chief Secretary to the Treasury, said: "It is vitally important everybody pays their fair share of tax.
"People who dodge the tax system are the moral equivalent of benefit cheats and we are coming to get them."
His Treasury colleague, David Gauke, added: "Where there are arrangements that are artificial, that are contrived, that are not undertaken for any genuine commercial reason, but are purely designed to reduce tax liability, then that is something that we want to address."
Meantime, No 10 made it clear that the Chancellor, George Osborne, in light of the latest claims over tax, stood by his previous comments that aggressive tax evasion was "morally repugnant".
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