Carr apologises for tax scheme

The comedian Jimmy Carr has apologised for using a tax avoidance scheme. David Cameron told ITV News yesterday Carr's tax arrangements were "morally wrong" - but today refused to comment on singer Gary Barlow's tax affairs.

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Cameron dodges question on Barlow

ITV News Political Editor Tom Bradby asked David Cameron if he thought Gary Barlow's "tax affairs were morally wrong and should he give back his OBE".

The Prime Minister dodged the question by saying he would not give a "running commentary on different people's tax affairs" as "that would not be right".

I made an exception yesterday because it was a very specific case where the details seem to have been published and it was a particularly egregious example of an avoidance scheme that seemed to me to be wrong and I made that clear.

I think the rules of the road here should be pretty frank. Tax evasion is illegal and should be pursued with all vigour by the authorities.

– David Cameron

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How does a tax avoidance scheme work?

  • Tax avoidance is the process of dodging taxation law without actually breaking it.
  • The company K2, used by comedian Jimmy Carr, works by transferring salaries from mainland investors into a Jersey-based trust which then gives the money back to investors in the form of loans.
  • Loans are not subject to income tax.
  • Jimmy Carr used the aggressive, but legal, scheme to protect some £3.3 million a year, a Times investigation uncovered. He is said to be one of more than 1,000 beneficiaries who shelter some £168 million from the taxman each year using K2.

The Times explains in more detail how K2 works - and has undercover footage of people who run it.

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Miliband adviser: PM should now look at his own party on tax

Stewart Wood, a shadow cabinet minister and adviser to Labour leader Ed Miliband, has tweeted that David Cameron should now look at those in his party that use tax avoidance schemes:

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