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Cameron's comments 'may come back to bite him'

Lord Digby Jones, Former Minister for Trade and Investment, has said that the Prime Minister's comments about Jimmy Carr's tax arrangements may "come back to bite him".

He said that there are many "comfortable" but not "wealthy" people in the UK who avoid moderate amounts of tax, but should not be demonised.

Footballers, he says, are fair game:

'We need a tax avoidance principle, not more rules'

Richard Murphy, an accountant who writes the blog Tax Research UK, has said that the Government needs to use its common sense and root out people whose tax bill does not match their earnings. Commenting on Jimmy Carr's tax arrangement (which he has vowed to change) he said:

There is a mismatch between economic reality andthe way [income] is being taxed. When that happens the Revenue should be ableto say: we are going to ignore all the artificial [tax avoiding] steps and instead tax theincome ... Whenever you put a rule in place the accountants find a way to break the rules. What we have to say is: rules are not good enough. We need a principle that lets us say (tax avoidance) is wrong.

– Richard Murphy, Tax Research UK

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Jimmy Carr: 'Let's see if I can take it'

Comedian Jimmy Carr has hinted that he will receive a dose of his own medicine on Channel 4's '8 Out Of 10 Cats' programme tonight:

Michael Meacher MP: Tax avoidance happening on an industrial scale

The Labour MP Michael Meacher has said that tax avoidance is happening on "an industrial scale" in the UK.

Yesterday, he introduced a Private Member's Bill designed to crack down on "schemes that are purely about avoiding tax on a massive scale".

Michael Meacher MP Credit: PA

He told BBC News that under the proposed legislation "any device that was purely to avoid tax would be declared null and void."

He continued: "that would make it easier for the Inland Revenue to block these schemes which are now on an industrial scale".

He said that the vast majority of tax avoiders are ultra wealthy people rather than ordinary wage earners, and added that he pays his dues.

PM: 'Not right' to comment on tax affairs of individuals

Prime Minister David Cameron said he would not be giving a "running commentary on different people's tax affairs" as "that would be wrong". He was responding to ITV News Political Editor Tom Bradby who asked if he thought Gary Barlow's tax affairs were morally wrong.

Mr Cameron also said it was important to distinguish between tax avoidance and tax evasion: the latter being illegal. He said the government would support for HMRC to pursue individuals engaging in "aggressive tax avoidance."

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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

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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