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(CNS Business): British comedian Jimmy Carr has become the butt of jokes following a storm of protest in the UK for his use of a Jersey-based tax avoidance scheme. However, in his capacity as Director of the Cayman Islands London Office, Lord Blencathra indicated that he was not amused by the inclusion of Cayman in a cartoon take on the matter that appeared in The Times , in which Carr, heading into "the Cayman Islands Embassy", says he is applying for political asylum. Pointing out that such an embassy does not exist, Lord Blencathra said, "When the United Kingdom tax rates get closer to those of the Cayman Islands, you will find that these ingenious tax avoidance schemes, lawful though they may be, will wither and disappear."
'I've been dishing it out for years, it's about time I got some," Carr said after a dig by fellow comedian Sean Lock, who told him, 'We all like to put a bit of money away for a rainy day, don't we? But I think you're more prepared than Noah."
However, the revelations that Carr has been paying as little as 1% in taxes through the K2 scheme has done more than turn the tables on the well-known British comedian, it has provoked a public backlash in the UK against the rich and famous paying as little tax as possible. Former prime minister Tony Blair has said the public mood on tax avoidance had changed in a time of austerity.
Following Prime Minister David Cameron's condemnation of Carr's participation in the Jersey-based scheme as "morally wrong", Danny Alexander, the chief secretary to the Treasury, said that all aggressive tax avoidance schemes were "morally repugnant".
Speaking on the BBC's Sunday Politics show, Alexander said, "What we are talking about is schemes that are set up, perhaps within the letter of the law as it stands at any particular moment, but which are set up purely with the purpose of reducing someone's tax bill."
He added, "These sorts of schemes which save wealthy people potentially many tens of millions of pounds in tax, they are paid for by everybody else. If we could narrow the tax gap in this country by a quarter we could reduce income tax for every basic rate taxpayer by 2p in the pound. So it's the working people of this country who are paying the difference because so many of the wealthiest think they can get away without paying their fair share of tax."
He also claimed the general anti-avoidance rule in the budget would pick up some of the worst examples of tax avoidance.
Full comment by Lord Blencathra, published by The Times, responding to an article on tax avoidance:
Sir, Unless I am mistaken, the Cayman Islands did not feature once in your extensive investigation of tax avoidance schemes. And understandably so, because no British citizen can evade or improperly avoid paying UK income tax by investing in the Cayman Islands. The Cayman Islands Government is a tax-neutral jurisdiction, but it has a double tax agreement with the United Kingdom government whereby HMRC is provided with full transparency for tax purposes in relation to any account in the Cayman Islands.
It was disappointing, therefore, that your cartoonist chose to misrepresent the true position by showing Jimmy Carr seeking asylum in the "Cayman Islands Embassy", which does not exist. We applaud your editorial for pointing out that high tax rates drive tax avoidance schemes, and for calling for lower taxes. It is a pity that you incorrectly portray a British territory, which has indirect taxes, only to perpetuate this myth that there is something immoral about low tax jurisdictions. When the United Kingdom tax rates get closer to those of the Cayman Islands, you will find that these ingenious tax avoidance schemes, lawful though they may be, will wither and disappear.
The Rt Hon The Lord Blencathra
Director, the Cayman Islands Government Office in the UK
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