Ground down: Starbucks pledges to pay £20 million tax over next two years

 

Coffee giant Starbucks today said it expects to pay “somewhere in the range of £10 million” in UK corporation tax for each of the next two years.

The announcement comes after it emerged Starbucks paid just £8.6 million in corporation tax in 14 years of trading in Britain and nothing in the last three years.

Starbucks UK managing director Kris Engskov told the London Chamber of Commerce that changes to its tax arrangements will see the firm pay above what is required by law.

Mr Engskov said the proposal had not been discussed with HM Revenue & Customs, adding: "With the backdrop of these difficult times, in the area of tax, our customers clearly expect us to do more."

Activist group UK Uncut is planning protests at Starbucks cafes on Saturday in protest at the company's tax arrangements as well as the impact of government spending cuts on women.

Starbucks, which has more than 700 outlets in the UK, made the announcement amid increased public pressure on multinational corporations to pay a fairer share of tax.

The chain, along with Google and Amazon, was accused of "immorally" minimising UK tax bills in a damning report by spending watchdog the Public Accounts Committee.

The committee criticised the companies for the "unconvincing and, in some cases, evasive" evidence they gave on why their corporation tax payments were so low.

Starbucks cut income tax by paying fees to other parts of its global business, such as royalty payments for use of the brand.

This meant Starbucks UK was effectively making a loss and therefore did not have to pay any corporation tax. As a result, it has not broken any law.

The Seattle-based company vowed not to claim tax deductions for royalties or payments related to its intercompany charges in 2013 and 2014.

Mr Engskov said Starbucks had always organised its tax affairs "according to the letter of the law" and added "the emotion of the issue has taken us a bit by surprise".

"These decisions are the right things for us to do," he said. "We've heard that loud and clear from our customers. And today, we're taking the actions necessary to pay more corporation tax in the UK."

Its nearest UK rival, Costa, recorded £377 million sales last year, compared with Starbucks' £398 million, but its tax bill came to £15 million.

Hannah Pearce of UK Uncut said that offering to pay some tax "if and when it suits" did not stop a company being a tax avoider, adding: "Starbucks have been avoiding tax for over a decade and continue to deny that it paid too little tax in the past.

"Today's announcement is just a desperate attempt to deflect public pressure. There's no money yet, and hollow promises on press releases don't fund women's refuges or child benefits."

She said the Government must be kept under pressure to force Starbucks and other tax avoiding companies to pay their fair share, instead of cutting welfare and tax credits for single mothers and disabled women.

UK Uncut said it was pressing ahead with protests on Saturday, targeting 40 Starbucks stores in towns and cities across the country.

MP Stephen Williams, who co-chairs the Liberal Democrat Treasury Committee, said: "I am glad that Starbucks has finally given in to public outrage and agreed to pay a fairer share tax in the UK. Other companies should follow suit."

Meanwhile, Mike Lewis, tax justice policy adviser for charity ActionAid UK, said: "Starbucks' tax back-down proves that companies do have a choice about where and how they pay taxes.

PA

Suggested Topics
News
Russia Today’s new UK channel began broadcasting yesterday. Discussions so far have included why Britons see Russia as ‘the bad guy’
news

New UK station Russia Today gives a very bizarre view of Britain

News
people
Voices
Left: An illustration of the original Jim Crowe, played by TD Rice Right: A Couple dressed as Ray and Janay Rice
voices

By performing as African Americans or Indians, white people get to play act a kind of 'imaginary liberation', writes Michael Mark Cohen

Arts and Entertainment
Keira Knightley and Benedict Cumberbatch at the premiere of The Imitation Game at the BFI London Film Festival
filmsKeira Knightley tried to miss The Imitation Game premiere to watch Bake Off
PROMOTED VIDEO
News
i100
Life and Style
fashion
Arts and Entertainment
Hand out press photograph/film still from the movie Mad Max Fury Road (Downloaded from the Warner Bro's media site/Jasin Boland/© 2014 Warner Bros. Entertainment Inc.)
films'You have to try everything and it’s all a process of elimination, but ultimately you find your path'
Arts and Entertainment
Imelda Staunton as Dolores Umbridge in the Harry Potter films
books

New essay by JK Rowling went live on Pottermore site this morning

News
people

Top Gear presenter is no stranger to foot-in-mouth controversy

News
i100
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

The benefits of Recruitment at SThree...

£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

Trainee Recruitment Consultants

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Finance Assistant - Part time - 9 month FTC

£20000 - £23250 Per Annum pro rata: Clearwater People Solutions Ltd: Pro rata ...

Marketing Manager

£40 - 48k + Benefits: Guru Careers: We are seeking a Marketing Manager to join...

Day In a Page

The drugs revolution starts now as MPs agree its high time for change

The drugs revolution starts now as MPs agree its high time for change

Commons debate highlights growing cross-party consensus on softening UK drugs legislation, unchanged for 43 years
The camera is turned on tabloid editors in Richard Peppiatt's 'One Rogue Reporter'

Gotcha! The camera is turned on tabloid editors

Hugh Grant says Richard Peppiatt's 'One Rogue Reporter' documentary will highlight issues raised by Leveson
Fall of the Berlin Wall: It was thanks to Mikhail Gorbachev that this symbol of division fell

Fall of the Berlin Wall

It was thanks to Gorbachev that this symbol of division fell
Halloween 2014: What makes Ouija boards, demon dolls, and evil clowns so frightening?

What makes ouija boards and demon dolls scary?

Ouija boards, demon dolls, evil children and clowns are all classic tropes of horror, and this year’s Halloween releases feature them all. What makes them so frightening, decade after decade?
A safari in modern Britain: Rose Rouse reveals how her four-year tour of Harlesden taught her as much about the UK as it did about NW10

Rose Rouse's safari in modern Britain

Rouse decided to walk and talk with as many different people as possible in her neighbourhood of Harlesden and her experiences have been published in a new book
Welcome to my world of no smell and odd tastes: How a bike accident left one woman living with unwanted food mash-ups

'My world of no smell and odd tastes'

A head injury from a bicycle accident had the surprising effect of robbing Nell Frizzell of two of her senses

Matt Parker is proud of his square roots

The "stand-up mathematician" is using comedy nights to preach maths to big audiences
Paul Scholes column: Beating Manchester City is vital part of life at Manchester United. This is first major test for Luke Shaw, Angel Di Maria and Radamel Falcao – it’s not a game to lose

Paul Scholes column

Beating City is vital part of life at United. This is first major test for Shaw, Di Maria and Falcao – it’s not a game to lose
Frank Warren: Call me an old git, but I just can't see that there's a place for women’s boxing

Frank Warren column

Call me an old git, but I just can't see that there's a place for women’s boxing
Adrian Heath interview: Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room

Adrian Heath's American dream...

Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room
Simon Hart: Manchester City will rise again but they need to change their attitude

Manchester City will rise again but they need to change their attitude

Manuel Pellegrini’s side are too good to fail and derby allows them to start again, says Simon Hart
Isis in Syria: A general reveals the lack of communication with the US - and his country's awkward relationship with their allies-by-default

A Syrian general speaks

A senior officer of Bashar al-Assad’s regime talks to Robert Fisk about his army’s brutal struggle with Isis, in a dirty war whose challenges include widespread atrocities
‘A bit of a shock...’ Cambridge economist with Glasgow roots becomes Zambia’s acting President

‘A bit of a shock...’ Economist with Glasgow roots becomes Zambia’s acting President

Guy Scott's predecessor, Michael Sata, died in a London hospital this week after a lengthy illness
Fall of the Berlin Wall: History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War

Fall of the Berlin Wall

History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War
How to turn your mobile phone into easy money

Turn your mobile phone into easy money

There are 90 million unused mobiles in the UK, which would be worth £7bn if we cashed them in, says David Crookes