A Times newspaper investigation has exposed a tax avoidance scheme that annually shields £168 million from HMRC and includes amongst its clients, the comedian Jimmy Carr.
The K2 scheme is provided by Peak Performance Accountants and works by transferring salaries into a Jersey based trust which then lends money back to investors. Technically, the loan can be recalled which allows the income to escape income tax. The 1,100 clients using this scheme pay as little as 1% income tax, according to the Times investigation.
Whilst confirming that the celebrity comic and TV presenter, Jimmy Carr, is a beneficiary of the scheme, his lawyers have denied their client is involved in anything illegal and that the arrangement had been disclosed to HMRC.
The Times reported that the K2 scheme has enabled Carr to keep £3.3 million from the clutches of the Revenue.
Roy Lyness of Peak Performance Accountants told an undercover reporter, “It's like a satnav. I'm driving to Manchester, get a message saying there's a smash at Stoke, press this button to re-route. The Revenue closes one scheme, we find another way round it.”
Following this year’s Budget that signalled a get tough approach on aggressive tax avoidance, Lyness announced to his clients, “We're delighted to inform you that most of the powerful tax saving opportunities survived unscathed.”
It is this type of brazen attitude towards aggressive tax avoidance displayed by the likes of Lyness and others that enrages the Government and will make them more determined to stamp out artificial schemes by way of a GAAR (general anti-abuse rule), which is currently being consulted on.
This kind of scheme is disgraceful. These smug, hypocritical b’stards have effectively opted out of society as a whole.
They’ll sit on the sidelines counting their ill-gotten gains while bemoaning the general breakdown of the country; the country that gave them their money-making opportunities and which they petulantly refuse to finance.
I’m no socialist and I despise the profligacy of government, but I recognise that everyone has a part to play/pay. The system is flawed, but without the system the world would be a horrible, anarchic place.
Totally agree with comment 1. If anything I feel the language is a bit restrained. Dante would have invented an extra circle of hell for such people.
Good luck to them, why should people prop up feckless goverments that waste millions of tax pounds – Anyone for a spair aircraft ccarrier or an NHS It system, got a spare few billions? – I say be as tax efficient as possible – good luck …
Well, “Stupid”, I’m hoping they’re all out of luck. I, for one, am completely (& unusually) behind the government on this one.
I had a former colleague who was in some sort of dodgy scheme that netted him 92% of gross (and he was on ~£500/d). He did very well out of it and actually enlisted a number of others, taking a commission each time. I politely declined on moral grounds.
Over the years he may have made a tidy profit, but I did smile to myself when the company behind the scheme disappeared one fine day and took ~£15-20k of his and many others’ cash.
In short, it’s one thing to be tax efficient but quite another to engage in such duplicitous rubbish. You listed a spair [sic] aircraft carrier and NHS IT system as examples of our money being wasted. Would you include education, care for the elderly, the NHS more generally or the emergency services as other wasteful items (pension issues aside – that’s another argument)?
I should add that in addition to taking home 92% he was sending his son to a state school. His daughter and possibly his son as well were born in NHS hospitals. When his house was broken into, he called the police.
Do you see where I’m going with these examples? Pay your way or just get out.
Should I point out that those unemployed persons also probably send their children to state school, spawn their offspring in NHS hospitals, and call the police when trouble arises. However, they pay 0% tax, in fact, they are given money whilst contributing nothing in return. Do you see where I’M going with this?
Let’s look at this mathematically; @1% tax on £3mil, that’s £30k in tax, more than the average uk earner pays in tax in a given year (by a clear mile). Yet Jimmy probably utilises the same quantifiable amount of “free services” on a yearly basis. Should he have to pay more just because he works hard and sells himself well?
I’m not going to deny there is an ethical debate afoot, but in reality he contributes more and receives the same as you, me, and everyone else…
My accountants offered me anidentical scheme, based in the IOM. I was concerned that since I would be living on an interest free loan there would be tax due on the nominal interest not charged.This sounds like very little (1%?), but the drawback I could see was that this would be a cumulative ever increasing tax since the idea is that the “loan” is never paid back. I made this point, but never got a convincing response. I decidednot to use the scheme.
when you see £billions of your tax being squandered on so many spongers (brits & non-brits), why not try to pay less? I would!
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