How advisers to stars lobbied MPs to make it a human right to avoid tax

Comedian Jimmy Carr was one of over 500 directors of tax shelter firm whose founders tried to prevent parliament closing loopholes

guardian.co.uk, Jamie Doward and Caroline Mortimer , Saturday 23 June 2012

Comedian Jimmy Carr is said to have used an aggressive - but legal -
tax-avoidance scheme. Photograph: Yui Mok/PA

Poor Jimmy Carr. If the comedian who likes to joke that he is "literally the biggest face in television" had not been so famous he would not be making headlines for all the wrong reasons.

And if a promoter of K2, one of the tax avoidance schemes Carr had signed up to, had not boasted about the comic's involvement to undercover reporters, his financial affairs, and those of many others, would have remained secret.

So, too, would the strange story of how a consultancy that devised another of Carr's tax shelters sought Tory support for a campaign that tried to turn tax avoidance into a human rights issue.

Records at Companies House show Carr was once one of 518 directors of Romangate, a company set up in 2009 to facilitate what at the time was believed to be a legitimate tax avoidance scheme.

Other directors included Coronation Street star William Roache, footballer Chris Sutton and Coleen Nolan, until recently a presenter on ITV's Loose Women. Stephen Lambert, the television producer behind hits such as Secret Millionaire, was also a director.

The majority of Romangate's directors, all of whom have now resigned, were contract workers and foreign nationals. A vast number were doctors, dentists, bankers, accountants, engineers and oil traders. One listed his profession as a watchmaker while another said he was a butcher. The aristocracy was represented by the socialite Lady Rona Delves Broughton and Lady Caroline Harrowby, an interior designer.

Romangate was part of a tax avoidance strategy called Rushmore that was closed down in 2009 without any financial benefit to its members amid claims in parliament that it could end up depriving the Exchequer of £200m. Introducing legislation to close the scheme down, the Labour Treasury secretary, Stephen Timms, explained: "We are preventing exploitation of the tax system by the schemes of a small number of wealthy people. Honest taxpayers rightly expect the government to identify such schemes quickly and block them effectively."

The diverse backgrounds of those who sought to benefit from the strategy suggests tax avoidance trusts are not simply vehicles for the super-rich. Romangate, which is owned by a Jersey trust called Plectron, is just one of a range of companies founded by financial consultants Matthew Jenner and Anthony Mehigan to help a multitude of clients avoid tax.

The two men, who declined to return calls from the Observer, run a tax consultancy called NT Advisors that lists an office in London's West End. The consultancy was behind a major lobbying campaign to wreck aspects of the previous government's 2008 Finance Act, which closed a number of tax loopholes.

NT Advisors hired a lobbying firm, the Whitehouse Consultancy, and briefed officials and politicians to press for parts of the bill to be dropped, arguing it would unfairly affect 600 individuals who benefited from legitimate tax avoidance schemes. "The introduction by stealth of retrospective legislation is an affront to the democratic process and seriously undermines the reputation of the UK as a good place to do business," Mehigan declared at the time.

NT Advisors wrote to politicians threatening to seek a judicial review of the act which they claimed breached Article 1 of the European Convention on Human Rights, the right to peaceful enjoyment of possessions.

In June 2009, the Tories tabled an amendment to prevent a retrospective clause of the act being extended. David Gauke, the Treasury minister, declared "the risks of retrospective legislation are very considerable" because "it damages stability and certainty in the UK tax system". The Tories' opposition delighted NT Advisors .

Gauke confirmed to the Observer: "We tabled an amendment on the retrospective element of this clause which closed down an avoidance scheme" but he stressed it was simply a parliamentary manoeuvre to gain clarification. He said the Tories had "enthusiastically supported" the Labour government's efforts to close tax avoidance schemes and the amendment was never pushed to a vote.

A campaign to overturn the retrospective elements of the act continues with some of the affected claiming financial hardship as a result of its introduction. But their cause will not have been helped by the revelation that among their ranks were a multi-millionaire comic, TV stars, City traders and super wealthy financiers.

Financial expert Richard Murphy said Carr's travails had catapulted the issue of tax avoidance to the top of the political agenda. "The public mood is moving against tax avoidance," Murphy said. "People really do want every one to be in this together."

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David Cameron, who attacked Jimmy Carr's use of tax

 avoidance schemes, faces new questions over his

 position on the issue. Photograph: Stefan Rousseau/PA