U.K. Comic Jimmy Carr Apologizes for Using Tax Avoidance Scheme

5:21 AM PST 06/21/2012 by Georg Szalai
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Meanwhile, a report says wealthy investors have also used film finance schemes to avoid taxes.

British comedian Jimmy Carr on Thursday apologized for participating in a tax avoidance scheme that has caused an uproar in the media and even led Prime Minister David Cameron to heap criticism on him.

"I met with a financial advisor and he said to me 'Do you want to pay less tax? It’s totally legal.' I said 'Yes',” Carr tweeted on Thursday. "I now realize I’ve made a terrible error of judgment."

The comedian added: "Although I’ve been advised the K2 tax scheme is entirely legal and has been fully disclosed to HMRC (Her Majesty’s Revenue and Customs), I’m no longer involved in it and will in future conduct my financial affairs much more responsibly."

He ended the note with the words "Apologies to everyone. Jimmy Carr."

As an introduction to his comment, he had tweeted: "I appreciate as a comedian people will expect me to ‘make light’ of this situation, but I’m not going to in this statement as this is obviously a serious matter."

The U.K. tax department said earlier this week that it is investigating the tax avoidance scheme used by wealthy individuals, including Carr, who sometimes paid as little as 1 percent in income tax.

Cameron had on Wednesday said that Carr was "morally wrong" for using the tax scheme.

Meanwhile, the Times of London reported on Thursday that more than £5 billion ($7.9 billion) of U.K. tax revenue was at risk from wealthy individuals who invest money into film finance schemes that help them avoid tax payments.

Partnerships set up for such purposes can be an incentive for investors to put cash into film projects, but also allow them to use losses to offset taxes on other income, the paper said.

It cited the example of the Terra Nova film investment fund, saying it helped investors avoid at least £18 million ($ million) in taxes by moving liabilities to Luxembourg.

Terra Nova investors claimed about £22 million ($35 million) in tax relief in 2006 after buying the rights to such films as 1408 starring Samuel L. Jackson, according to the paper. Of that, £18 million ($28 million) were supposed to be paid back the following year, but investors got the chance to "retire" from the partnership and move all liabilities to a Luxembourg-based firm.

Lawyers for the company behind the fund said restructurings in partnerships could happen for a range of reasons and highlighted that the vehicle did not make decisions for its investors.
 

Email: Georg.Szalai@thr.com

Twitter: @georgszalai

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