Cameron accused of hypocrisy over Jimmy Carr case

Comedian Jimmy Carr spoke out after the Prime Minister branded his tax dodging "morally wrong" (Rex Features)

David Cameron was accused of hypocrisy last night after he joined the outcry over celebrities trying to dodge taxes through complicated schemes sheltering their income.

The Prime Minister denounced the comedian Jimmy Carr, right, as "morally wrong" for putting his earnings into a "very dodgy tax avoiding scheme". Carr is reportedly among high-earners who cut their tax rates to as little as one per cent by channelling cash through Jersey-based company K2.

But Mr Cameron refused to be drawn on separate claims that Gary Barlow and his Take That bandmates had put their money in a scheme designed to avoid tax. The disclosure was embarrassing for him as Barlow campaigned with the Tory leader at the general election and received the OBE last week.

Last night former Labour deputy leader Lord Prescott accused Mr Cameron of double standards. He pointed to Lord Ashcroft, the former Tory deputy chairman, who was not domiciled in Britain for tax purposes despite sitting in the House of Lords.

Lord Prescott tweeted: "So if you're a comedian and avoid tax, the Tories condemn you. If you're a millionaire donor and avoid tax, you get a peerage! #ashcroft."

Yesterday Mr Cameron singled out the "Jimmy Carr scheme". He said: "People work hard, they pay their taxes, they save up to go to one of his shows. They buy the tickets. He is taking the money from those tickets and he, as far as I can see, is putting all of that into some very dodgy tax avoiding schemes."

Carr reportedly protects £3.3m a year by putting cash through K2. It transfers salaries into a trust, which lends the cash back to the investors. Because they have technically received a loan which can be recalled, the money is not liable to income tax.

It has also been alleged that Take That invested £26m in a scheme run by Icebreaker Management Services, which says it operates "within the law".