Tax: Starbucks in talks with UK's Revenue and Customs

 
Cup of Starbucks coffee Starbucks is in talks with HMRC about how much tax it pays

Global coffee chain Starbucks has said it is in talks with HM Revenue and Customs and the Treasury over how much UK tax it pays.

It is one of several well-known firms that were criticised over the level of their corporation tax payments.

The firm admitted that it "needed to do more" in the UK on tax.

Meanwhile, Chancellor George Osborne has pledged more funds for the British authorities to tackle tax avoidance by multinationals.

He told the BBC that an announcement would be made on Monday about the "extra investment in the part of the Inland Revenue that tackles tax avoidance by multinational companies".

A Public Accounts Committee report on the topic of how much tax multinational firms pay in the UK is due on Monday.

In November the committee took evidence from executives from Starbucks, Google and Amazon over the amount of tax the companies have paid in the UK.

'Competitive'

"We have listened to feedback from our customers and employees, and understand that to maintain and further build public trust we need to do more," said a Starbucks statement.

"As part of this we are looking at our tax approach in the UK. The company has been in discussions with HMRC for some time and is also in talks with The Treasury."

Starbucks, which has more than 700 outlets across the UK, said more details would be released later this week.

BBC business correspondent Theo Leggett said the coffee company reported sales of nearly £400m in the UK last year, but paid no corporation tax at all.

"Much of the money it earns in this country is transferred to a sister company in the Netherlands in the form of royalty payments, leaving the UK division to report regular annual losses," he added.

Mr Osborne did not single out any firms while making his announcement on the Andrew Marr Show.

He also said that as well as his extra funding for the UK authorities, it was also necessary to work at an international level on the issue.

"It is actually Britain who has been working with Germany and France to get those rules on the international table," he said.

But he also warned against "pricing Britain out of the world economy", adding that "if we make our taxes less competitive that will just mean more companies stay out of Britain".

Campaign group UK Uncut said Starbucks' announcement was "a blatant admission of guilt" that it had intentionally avoided tax.

Spokeswoman Jane Harvey said: "The government's next step must be to close the loopholes that Starbucks and other companies use to avoid paying billions in tax to the UK, instead of targeting single mums and disabled people through slashing public services, the welfare state and privatising the NHS."

Monday's PAC report is expected to be critical of the current way in which multinational firms used UK tax legislation.

After last month's hearings, PAC chair Margaret Hodge MP said: "One of our concerns is that the ability of global companies to choose where they put their costs and their profits gives them an unfair tax advantage that damages UK-based businesses,"

 

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  • rate this
    -20

    Comment number 45.

    Starbucks sucks for sure, but I don't really have an issue with Google not paying much tax. They give us so many free services that we use every day and that we'd be lost without (literally, Google maps!)

  • rate this
    +13

    Comment number 44.

    Costa Coffee is much better. Do not use Starbucks. Simple.

  • rate this
    +9

    Comment number 43.

    If they don't want to pay tax, they can leave.
    If they want to play games by shuffling tax liabilities around to low-tax countries, then we should remove all corporation tax, and make it a flat sales tax instead.

  • rate this
    +51

    Comment number 42.

    The US Government took a very tough line with BP over the incident in the Gulf - $4.5bn fine and banning them from any new contracts in the US. The UK Government should take an equally tough line with Starbucks - no more planning permission for any new Starbucks until they pay UK corporation tax is the absolute minimum that I would see as acceptable.

  • rate this
    +6

    Comment number 41.

    Actions speak louder than words. Lets wait and see what happens.

  • rate this
    +4

    Comment number 40.

    What's the minimum amount of tax Starbucks can pay before damage to its reputation starts hurting their UK business? Bet your personal income tax allowances that's the amount they will pay.

  • rate this
    +15

    Comment number 39.

    It does surprise me that some companies are allowed 'pride of place' in the high street, but don't contribute anything to it.

  • Comment number 38.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    +12

    Comment number 37.

    I have boycotted Starbucks and will not buy from them until they get the message that they WILL pay their fair share like the rest of us. Otherwise Starbucks, bugger off back to the US and don't profit from any sales in the UK - we will not miss you I can tell you that much!

  • rate this
    +56

    Comment number 36.

    Next time they ask for your name to write on the cup, just say UK Tax Paying Citizen. Or even better, go elsewhere for your coffee.

  • rate this
    +316

    Comment number 35.

    I don't see why we're so scared of running companies out of Britain. A lot of these companies have huge investments that they can't simply walk away from along with market share, exposure and english as a first language. this would make an international move over following legal tax procedure a stuipd business decision. I think it's time to stop being pushed around by these guys.

  • rate this
    +261

    Comment number 34.

    I earn my income in the UK and so I may my taxes to the UK as income tax, VAT etc...
    Why should a multinational company be able to decide where to pay its taxes?
    If it earned an income, less verifiable expenses, it should pay taxes in the country where it was earned. Seems simple to me.
    Tax avoiders need to be NAMED and SHAMED. Pay up or get out of the UK altogether.

  • rate this
    +52

    Comment number 33.

    "if we make our taxes less competitive that will just mean more companies stay out of Britain". Sounds exactly what we should do for big chain eateries and supermarkets (e.g. walmart) - let the local economy build its own.

  • rate this
    +116

    Comment number 32.

    "if we make our taxes less competitive that will just mean more companies stay out of Britain".

    Sorry but when it comes to starbucks etc if they dont want to sell the coffee im pretty sure another company will.
    there is no way we can be priced out by raising taxes on this. These corporations destroy economies by taking the money and channeling it out away from the area. Tesco/starbucks the lot!

  • rate this
    +77

    Comment number 31.

    Anyone who still goes to Starbucks should be ashamed of themselves. This disgusting company is in effect stealing from all of us, closing hospitals and schools to fund their corporate greed. Please have the decency to send them a message by boycotting them.

  • rate this
    +14

    Comment number 30.

    Why worry about big multinationals moving away if we force them to pay their fair share of tax in this country? If I make a million pounds of profit in the UK and instead of paying zero tax I am forced to pay 200k of it to the tax man in the UK I will not stop trading in the UK so I lose all my profits from the UK. The government needs to stop treading on eggshells around these big multinational

  • rate this
    +9

    Comment number 29.

    Starbucks, Amazon et al should kicked out of the UK.

    If you want to trade here, PAY YOUR TAX!

  • rate this
    -42

    Comment number 28.

    It's a catch-22. If we tell them they can't trade in the UK unless they pay tax, they might withdraw altogether and whoever works for them gets made redundant (and that costs us all).

    On the other hand they should pay their fair share if they want to trade here.

    The question I'd like to ask, though, is how other countries manage to function charging less tax when we can't.

  • rate this
    +10

    Comment number 27.

    Not going to buy from Starbucks.Im not disgusted at them, hate the game not the players,but because I can get coffee cheaper elsewhere or for the same price but I know at least some of my money will be going back into the economy;or into the pocket of individual coffee shop owners which is fine as well because they wont ship their money abroad so ultimately its still going back into the economy

  • rate this
    +5

    Comment number 26.

    The best way is not to buy their product pure and simple !

 

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