Did you hear the one about the comedian and the tax loophole? It’s been difficult to miss it the last week or so, though there is no witty punchline. Jimmy Carr has been on the receiving end of a tidal wave of criticism, and not a few jokes, after the revelation that he was exploiting a tax loophole to pay just 1p in the pound tax on his not insubstantial income.
After the news broke about his use of the K2 tax haven, he moved quickly to disengage himself from the scheme and apologise, promising to act more responsibly in future.
It is unfortunate for the comedian that PM David Cameron singled him out and referred to the K2 scheme as the “Jimmy Carr scheme”. I fear that title may stick in the media. Certain members of Take That, said to be making use of a similar scheme to avoid paying tax, got off more lightly.
He says he was asked if he wanted to pay less tax, he said yes, and went with the advice. With hindsight, he maybe should have understood the full consequences of that advice.
Jimmy Carr is not the first high-earner to take steps to decrease his tax bill. The list of tax exiles over the years is long. Tax is a minefield. In fact, finances in general are and unless you are an expert in the field it really is a struggle to understand the different policies, schemes, systems and scams for everything from bonuses to pensions. You need the right advice from an experienced professional. When I have had clients with complicated financial affairs, we have often drafted in the help of external experts to help with financial settlement on divorce. Luckily, we have worked with some reliable advisers for some time so are able to advise clients accordingly.
Whether it is finances, family law or how to grow tomatoes, the benefits of the right professional advice are priceless. Eight out of 10 cats think so.