Starbucks has paid no tax in UK for three years

The Bolton News: Starbucks has paid no tax in UK for three years Starbucks has paid no tax in UK 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 which has branches in Bolton's Market Place and at Middlebrook has generated more than £3 billion of sales in the UK since 1998 but has paid less than 1% in corporation tax. The company is valued at £25 billion.

Its nearest UK rival, Costa, owned by Whitbread and which has several coffee shops in Bolton, recorded £377 million sales last year, compared to Starbucks' £398 million, but its tax bill came to £15 million, or 31% 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.

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 £26 million 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.

A 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."

Comments (6)

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2:27pm Tue 16 Oct 12

Kevin Turvey says...

Plenty of UK based companies have legal entities in other countries around the world and they would be poorly run countries if they didn't try and pay as little tax as possible. If you were a CEO of a global brand wouldn't you too try and optimise your company's profitability, or would you eat into it by paying tax wherever you could out of some kind of moral obligation?

I have no affiliation with Starbucks but legally they are noing NOTHING wrong but they ARE providing a lot of people with jobs in a day and age where there are supposedly very few.
Plenty of UK based companies have legal entities in other countries around the world and they would be poorly run countries if they didn't try and pay as little tax as possible. If you were a CEO of a global brand wouldn't you too try and optimise your company's profitability, or would you eat into it by paying tax wherever you could out of some kind of moral obligation? I have no affiliation with Starbucks but legally they are noing NOTHING wrong but they ARE providing a lot of people with jobs in a day and age where there are supposedly very few. Kevin Turvey

2:44pm Tue 16 Oct 12

A Darener says...

Obviously the Tax Laws need changing. El pronto!!!
Obviously the Tax Laws need changing. El pronto!!! A Darener

4:38pm Tue 16 Oct 12

steveG says...

They must have paid at least £60 million in VAT?.
They must have paid at least £60 million in VAT?. steveG

6:08pm Tue 16 Oct 12

exiled says...

In other words, they pay the tax they are obliged to pay....?

Hands up if you want to pay more tax than you need to...?

Thought not.
In other words, they pay the tax they are obliged to pay....? Hands up if you want to pay more tax than you need to...? Thought not. exiled

7:34pm Tue 16 Oct 12

JustBecause says...

thats business, you get away with what you can get away with if its legal then fine.
thats business, you get away with what you can get away with if its legal then fine. JustBecause

9:26pm Tue 16 Oct 12

SmoggyDiasboro says...

Dear Population of Bolton.
If you feel that strongly about it - don't go there. They'll get the hint. Re the 'they've paid their VAT - get real - the punters pay the VAT in the price'. If they're getting away with reduced Corporation Tax, they are getting an unfair advantage. If the Treasury can't stop it, you can. Don't spend any money there
Dear Population of Bolton. If you feel that strongly about it - don't go there. They'll get the hint. Re the 'they've paid their VAT - get real - the punters pay the VAT in the price'. If they're getting away with reduced Corporation Tax, they are getting an unfair advantage. If the Treasury can't stop it, you can. Don't spend any money there SmoggyDiasboro

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