JIMMY Carr has pulled out of a tax avoidance scheme after it was described as "morally wrong", saying he had made a "terrible error of judgement".
The comedian had been exposed as the biggest beneficiary of the K2 scheme, which protects money from tax in Jersey.
In a statement released via his Twitter page, Mr Carr apologised and promised to conduct his financial affairs "much more responsibly".
He told his 2.3 million followers: "I appreciate as a comedian, people will expect me to ‘make light’ of this situation, but I’m not going to in this statement as this is obviously a serious matter.
"I met with a financial advisor and he said to me 'Do you want to pay less tax? It’s totally legal.' I said 'Yes.'
"I now realise I’ve made a terrible error of judgement.
"Although I’ve been advised the K2 Tax scheme is entirely legal, and has been fully disclosed to HMRC (Her Majesty’s Revenue and Customs), I’m no longer involved in it and will in future conduct my financial affairs much more responsibly. Apologies to everyone."
His mea culpa came after David Cameron said it was "morally wrong" to avoid tax using such a scheme.
In response, Labour leader Ed Miliband said politicians should not lecture people about morality.
Mr Miliband said: "I'm not in favour of tax avoidance obviously, but I don't think it is for politicians to lecture people about morality.
"I think what the politicians need to do is - if the wrong thing is happening - change the law to prevent that tax avoidance happening and I think that is the right course the Government should take.
"Instead they are taking the wrong course which, as I say, is cutting taxes for millionaires."
UK Revenue commissioners have confirmed that the 'K2' scheme is under investigation and have vowed to "challenge it in every way available to them", saying "the government does not intend anyone, no matter who they are, to get away with paying less than they should".
The tax scheme is understood to protect £168m (€208m) a year from the taxman in Jersey, with Jimmy Carr as its largest beneficiary.
Mr Cameron said: "I think some of these schemes -- and I think particularly of the Jimmy Carr scheme -- I have had time to read about and I just think this is completely wrong.
"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.
"That is wrong. There is nothing wrong with people planning their tax affairs to invest in their pension and plan for their retirement -- that sort of tax management is fine.
"But some of these schemes we have seen are quite frankly morally wrong. The government is acting by looking at a general anti-avoidance law but we do need to make progress on this," he said.
According to a special newspaper investigation, Mr Carr had sheltered £3.3m (€4.1m) a year. It was also claimed members of Take That had also invested at least £26m (€32m) in a scheme believed to be a method of avoiding tax.
Singers Gary Barlow, Mark Owen and Howard Donald, along with their manager Jonathan Wild, invested money in a music industry investment scheme used by nearly 1,000 wealthy individuals.
Lawyers for the comedian have confirmed he is a member of K2, but categorically denied any wrongdoing, saying the scheme had been disclosed to the relevant authorities in line with the law.
Mr Carr reportedly protects some £3.3m a year by channelling cash through Jersey-based company K2, which then returns the money in the form of a loan. This is not subject to income tax.
He spoke out last night after he was confronted over his own financial arrangements during a show in Tunbridge Wells, in Kent.
Challenged by a member of the audience who told him: "You don't pay tax." He replied: "I pay what I have to and not a penny more."
Lawyers for Gary Barlow, Mark Owen, Howard Donald and Jonathan Wild confirmed they were investors in two partnerships but said they paid significant tax. There is no suggestion that the scheme is illegal.