MPs are to investigate Britain’s “banana republic” tax avoidance schemes amid claims that some of the country’s most wealthy residents are paying a lower rate than nurses and teachers.
The Commons Public Accounts Committee will examine whether arrangements such as the “K2” scheme — which has been used by comedian Jimmy Carr — and music and film investment funds used by other celebrities are “loopholes” which should be closed down.
A report by The Times revealed that nearly 10 per cent of people who earned £10 million or more last year paid an average tax rate of 20 per cent or less.
Six per cent paid an overall tax rate of below 10 per cent — even though they would normally pay the top rate levy of 50 per cent.
Margaret Hodge, chairwoman of the Commons Public Accounts Committee, warned that MPs were determined to stop both individuals and corporations from avoiding tax.
She said: “There are legitimate concerns about whether the state provides value for money, but these cannot justify individuals or companies seeking out wheezes designed simply to avoid paying their rightful contribution. Some of the practices highlighted by The Times wouldn’t look out of place in a banana republic.”
