No Joke for Comedian Jimmy Carr. Avoiding Taxes At a Very Hard Price

Jimmy Carr is a successful, well known and prestigious comedian in Britain. As an indirect measure of popularity, Carr counts with 2.3 million followers in Twitter. He has some 460,000 like his Facebook fans page.

The Times published two days ago (19 June 2012) an article explaining that Carr was benefitting from reduced tax payments taking advantage of tax avoidance schemes in Jersey. (As The Times use restricted registered access, we do not provide the original souce, but an open one, like the article in The Telegraph: ‘Comedian Jimmy Carr ‘has £3.3m in Jersey tax avoidance scheme’).

See the cover page by The Times. Clearly, The Times did not choose a ‘neutral’ presentation of the facts, but rather decided to guide readers’ opinion towards disavowal: The unfriendly photo chosen, the secondary headline (‘The Chancellor says the most aggressive of them are ‘morally repugnant’).

Aparently the comedian first reacted in a ‘hey, this is a legal fiscal tool!.

After details of his tax arrangements were revealed by The Times newspaper on Tuesday, Carr hit back during a show in Tunbridge Wells in Kent last night (…). Challenged by a member of the Kent audience who heckled ‘You don’t pay tax’, Mr Carr replied: ‘I pay what I have to and not a penny more,’

Mail, 21 June 2012

According to the same source, the tax avoidance scheme works in the following way:

The comedian has come under fire this week for having used a legal Jersey tax avoidance scheme which enables him to pay only 1 per cent income tax.

Carr, who has publicly mocked fat-cat bankers, reportedly puts away £3.3million a year via the K2 tax scheme, which is used by more than 1,000 tax avoiders, to shelter some £168million from the taxman.

K2 works by transferring salaries into a Jersey-based trust, which lends investors back the money. Because the loan can technically be recalled, it is not subject to income tax.

Carr’s lawyers have confirmed his K2 membership but said there was nothing unlawful about managing his affairs in a ‘tax efficient manner’, and that they had been disclosed to the relevant authorities.

 Mail, 21 June 2012

See here a sketch video with Jimmy Carr satirising banks (Barclays) and tax avoiders using 1% tax plan.

But social media reacted outraged, and twitter provided the visibility to this public opinion anger. See for instance a collection of tweets by The Guardian (21 June 2012). Even British Prime Minister intervened in this case, judging Carr fiscal practices as ‘morally wrong’ (Bloomberg, 20 June 2012).

Here the statements by Prime Minister David Cameron about tax avoidance schemes.

This was just a matter of a couple of days. But this was of course a distroying reputation crisis.

Jimmy  Carr did what he had to do, the only thing he could do: presenting apologies, and cancelling the tax avoiding funds in Jersey.

Here the collection of tweets:

*****

Facebook page was used to reproduce the statements made in Twitter:

Jimmy Carr business is fully determined by his personal brand. Will this personal reaction save the situation and restore his damaged personal reputation? Was it timely?

We will come back to this very attractive crisis case very soon, with reputation metrics helping us to answer concerning the short term impact of the crisis and the way to address it taken by the comedian.

Traditional media and social media analysis will be the tools that we will apply to analyze this case.

P.S. Of course, now David Cameron has a quite nice reputation crisis bombshell. He affirms publicly that that Jimmy Car is ‘morally wrong’ in tax. Jimmy Carr says that what he is doing is totally legal. So the next question, once Jimmy has solved his personal wrongdoings is, why PM Cameron and Parliament make legal so immoral things… specially in times of crisis?

It is indeed quite embarrassing to discover that wealthy tax payers can use legal tricks to pay just a 1 percent income tax. It is a discovery not amusing for middle class people paying let’s an income tax bill of 20-35% of revenues. Specially in countries where Governments ask for increasing tax efforts and expenditure cuts in the midst of an economic crisis.

Nevertheless, not all people consider this situation to be unfair and ‘morally repugnant’. You can find for instance Jamie Whyte, senior fellow of the Cobden Centre in London, who appears ‘In Defense of Jimmy Carr’ (Wall Street Journal, 21 June 2012). Even if this is a well written opinion article, but, in my opinion, plenty of sophism in argumentation, much more will be needed to ‘protect’ David Cameron and his Government against public opinion pressure to move into a radical revision of tax avoidinng schemes like K2.

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