Coffee giant 'close to deal over UK tax payments'

The American coffee chain Starbucks is understood to be close to a deal with Her Majesty's Revenue and Customs that could see it pay between £5m and £10m in corporation tax this year.

The payment would more than double tax receipts from the company, which has paid only £8.5m to the Treasury since its UK launch in 1998 – despite sales of £3bn.

Starbucks would not confirm the agreement but has promised an announcement today. It comes after talks with HMRC about its tax liability and a public campaign to force the company to change its stance. It is understood that sales have suffered in the wake of the company's much publicised tax avoidance strategy and appearance before MPs on the Public Accounts Committee where its management were described as evasive.

Its decision is likely to put further pressure on other multinational companies such as Amazon and Google to voluntarily increase the amount of tax they pay in the UK.

Yesterday Margaret Hodge, chairman of the PAC stepped up her campaign against tax avoidance by suggesting that accountancy firms which help multinationals aggressively avoid paying tax should be banned from tendering for lucrative government contracts.

Ms Hodge said ministers should use the "power of the public purse" to encourage firms such as PwC, Ernst & Young, KPMG and Deloitte to ensure their clients pay up.

"Mary Monfries, head of tax policy at PwC, strongly defended the firm's practices, insisting that it operated fully within the law.

Mary Monfries, head of tax policy at PwC, said: "We have some clear principles about the way we work... Any tax advice that we give has to be based and supported by the law."