I agree that Jimmy Carr hasn’t done anything wrong, morally or otherwise, and should not be castigated for keeping within the law. It was outrageous that the Prime Minister should choose one person to name in this way.
As with any tax system, there are a myriad of allowances, incentives, penalties and pitfalls. HMRC are now a single unified body, and have responsibility for overseeing the lot, but still largely rely on companies and individuals declaring their earnings each year. If a person has an employer and no other income, they don’t even have to think about it, as all tax is taken at source. As soon as anyone has any other income, holds a directorship or owns shares, they need to declare it all each year. Whilst there are penalties for non-compliance, this is mainly based on trust. We know that HMRC can choose to look closely at any one of us, at any time, so most people daren’t tell porkies. That still, however, leaves plenty of room for manoeuvring by eagle eyed accountants. Nothing illegal; just taking advantage of the system.
When the general public think about wealthy people, it’s usually those in the public eye, who have made their money quickly. This includes entertainers, sports stars, and high profile businessmen and women. The public are reminded regularly that even though Wayne Rooney earns £10m per annum, he is paying at least £5m of that back in tax. He’s a working class lad, from a poor background, who has done very well for himself. With notable exceptions, the rise of the super-rich stand-up comedian is fairly recent. Long before stadium tours, Billy Connolly was selling immense volumes of albums, videos and then DVD’s. He was at the very forefront of these revenue streams in the UK. At a concert Billy once joked “Don’t feel sorry for me. I’m fucking loaded!”, and got great laughs. People felt good that he was doing so well, partly because they could see the direct connection between their ticket price and his good fortune. By the same token, anyone who accepts cash from the public, has to accept that there is a responsibility that goes with it. You cannot be seen to disparage those who put you there (ask Gerald Ratner or Freddy Shepherd).
In the specific instance of Jimmy Carr, as well as the laughs, the public will have expected him to keep his feet on the ground, and behave like he was still one of us (which of course he isn’t). We want to believe that he is compelled to abide by the same rules as the rest of us, even though he is the personification of a multi-million pound business operation. So when his tax affairs were revealed, it is inevitable that many people feel like they’ve been conned; that he’s been taking the piss. “He’s been pretending to be one of us, whilst all the time he’s been picking our pockets!”
As I say, I personally do not find fault with Jimmy Carr, but with the system which has allowed it. Such has been the deviousness of accountants over past years, that in the budget earlier in 2012 was a measure which could go a long way to helping the situation. This measure gives HMRC the power to decide that any scheme, which has the effect of greatly reducing a person’s tax bill is evasion of tax. Regardless of the reasons given, all income is treated as taxable, and the responsibility falls to the individual (or their accountant) to prove that it isn’t.
As a result of this, the public must assume that anyone earning more than £200k per annum is using these same methods to avoid tax. This will create a dangerous divide, similar to that created with politicians and journalists, as a result of their hugely embarrassing misdeeds. If we want to avoid this “Them and Us” scenario, and politicians, journalists, celebrities and even stand-up comics want to be seen as men (and women) of the people, then they need to start behaving like it.
With regards to tax loop holes, as Chris Rock might say
“Yeah, you can do it man, but it don’t mean it’s to be done! Shit!”
