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.


"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

    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

    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

    Comment number 12.

    If I opened up a local coffee shop, I'd be paying 24% corporation tax. If Starbucks are paying nothing, how am I supposed to compete with that? I can't, which is why we have a Starbucks on every corner.

    We don't need these companies. They are vampiring our economy. If the government would boot them, local people could start businesses in their place creating entrepreneurs from our people.

  • rate this

    Comment number 51.

    Any business operating within the UK should pay tax, no exceptions!

  • rate this

    Comment number 9.

    The government MUST build a decent system for corporate taxes that does not favour international corporations over smaller national companies. If Starbucks left the UK, local coffee shops would spring up to take their place and would, eventually, employ the same number of people in a given location. They would pay tax in this country rather than abroad.

    No special arrangements for corporates!


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