Coffee giant 'not paid UK tax for three years'
COFFEE giant Starbucks has reportedly paid just £8.6 million in corporation tax in 14 years of trading in Britain – and nothing in the last three years.
The American coffee firm – valued at £25 billion – has generated more than £3billion of sales in the UK since 1998 but has paid less than one per cent in corporation tax.
Its nearest UK rival, Costa, owned by Whitbread, recorded £377 million sales last year, compared to Starbucks' £398million, but its tax bill came to £15million, or 31 per cent of its profits.
Starbucks, which has more than 700 outlets in the UK, said it has paid its "fair share of taxes" in full compliance with UK law and no authority had suggested otherwise.
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The Seattle-based firm is the latest company to come under scrutiny for making a poor contribution to HM Revenue & Customs (HMRC) after Facebook and Google met similar criticism.
A four-month investigation by news agency Reuters discovered that Starbucks was able to cut income tax by paying fees to other parts of its global business, such as royalty payments for use of the brand.
This means Starbucks UK is effectively making a loss and therefore does not have to pay any corporation tax.
As a result, it has not broken any law.
But Labour MP and tax campaigner Michael Meacher said Starbucks' practice is "profoundly against the interests of the countries where they operate and is extremely unfair... they are trying to play the taxman, game him. It is disgraceful".
The most recent results, posted for 2011, show Starbucks UK recorded a loss of £33 million. But it is understood that Starbucks has told investors the business is profitable.
The second largest restaurant or cafe chain in the world, after McDonalds, paid £26million in royalties and licence fees to let the UK coffee houses use its labelling.
It does this by registering the intellectual property rights to another division of the company.
An HMRC spokesman said: "For legal reasons, we cannot comment on the tax affairs of individual businesses, but we make sure that multinationals pay the right tax to the UK in accordance with UK tax law.
"Our tax rules combat tax avoidance and we employ specialist tax professionals to ensure that multinationals play by the rules."
Last week it was revealed that Facebook paid only £238,000 in tax in the UK, despite pulling in £175 million in revenues, while Google reportedly paid £6 million in UK tax despite revenues of £2.6 billion.
Comments
by Anorexorcist
Wednesday, October 17 2012, 1:04PM
“Surely people don't believe that the Treasury, BoE, HMRC and the bloke that lives at number 11 are really that incompetent and bad at their jobs, and are just getting their lunch money stolen and ears flicked by the smart Starbucks accountants??
This is not actually breaking news as it was first disclosed months ago, maybe even more close to a year ago but hey, we get angry, we blog, we move on and forget!
Do you know what is breaking news today? The substantial drop in people claiming job seekers allowance which has been accredited to the amount of people who want to full time work but are doing part time work.
Who can name a big US multi-national corp who's work force is mostly part-time?”
by stueys
Wednesday, October 17 2012, 11:30AM
“Good on them, get in !!!!”
by niugnepyzarc
Wednesday, October 17 2012, 11:22AM
“These are what the gobvernment should be going after, how much of the debt could be wiped if big businesses had there loopholes closed and were made to pay the correct amount of tax? much better for the general public then cutting back on public services and targeting the weakest areas of society like the disabled and pensioners as the tories seem to be doing.
But then to many of them are owned by said big businesses arent they! how many of these companies donate to the tory party for example? so itll never get done.”
by madmax76
Wednesday, October 17 2012, 11:10AM
“Its the governments fault for not closing loopholes. We'd all like to pay less taxes wouldn't we?”
by trudie2010
Wednesday, October 17 2012, 10:58AM
“I have never been in one of these american type coffee places, but they always look busy, make them pay the same tax as anyone else, they think they can come here and put our little cafe's and tea shops out of business, then rip us off and send all the money back home. Time for a tax investigation on all of these firms, drink and food chains!”