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Anorak | Jimmy Carr’s tax avoidance was never going to work – here’s why

Jimmy Carr’s tax avoidance was never going to work – here’s why

by | 21st, June 2012

YES, of course, it’s been a lovely chuckle. Jimmy Carr snarled at Barclay’s for dodging taxes and then is revealed as someone who has been doing his best to do the same. Yes, I know, I know, Polly Tonybee’s kids went to private school, as did Alan Rusbridger’s I think; Ken Livingstone still hasn’t managed to provide a full tax accounting even though the election’s well over. Richard Murphy, the nationally known tax expert, reportedly, has been shown to have used exactly the schemes that he denounced as “tax abuse” in a report for the TUC.

It’s all very amusing really, isn’t it? But the question I have about all of this is, well, why are they so damn bad at dodging taxes? Take Carr for example: unless he’s about to do something very strange indeed then he’s not actually been able to dodge any tax. He’s delayed having to pay it, yes, this is true, but not actually dodged it.

The essential nut of the scheme was that instead of being paid the money he earns it all goes off to Jersey and he gets minimum wage or the like. Then the rest of the cash is lent to him instead of paid to him. As it’s a loan which he has to pay back there’s no tax on it.

Except, well, HMRC says that in this case you have to pay tax on the interest that you ought to be, even if you’re not, paying on the loan. So there is some tax. And of course, at some point you’ve got to pay back that loan: which means that you’re going to have to pay yourself the money and pay tax on it in order to be able to pay it off. And if you don’t pay off the loan: then you have to pay tax because a loan forgiven can indeed be regarded as income that is to be taxed.

The only way out of this is to leave the country and become non-resident. But that’s a lot more difficult than it used to be: you really do have to leave the country, and for some time, before you’ll qualify as non-resident. In the absence of doing that you’ll have to pay the tax at some point. The whole scheme only delays paying tax, not eliminates it.

And this is what I mean by why are lefties so bad at this tax dodging stuff? There are great, simple and legal, ways of reducing a tax bill and none of these people seem to bother to use them. But they will try complex ones that don’t really work. What is it? Are lefties simply thick?

 



Posted: 21st, June 2012 | In: Money Comment | Follow the Comments on our RSS feed: RSS 2.0 | TrackBack | Permalink