Starbucks may face UK tax probe after politician asks for inquiry

 

Starbucks may face an inquiry into its UK tax affairs after a senior MP called for an investigation into how the company could avoid paying tax on £1.2bn of sales since 2009.

A Reuters report that Starbucks had been telling investors its UK unit was highly profitable while telling the UK authorities that the unit was loss-making, and thereby not liable for tax, undermined public trust in the tax system, MPs said.

Labour MP Margaret Hodge, Chair of the Public Accounts Committee (PAC), said Her Majesty's Revenue and Customs (HMRC) should look into Starbucks' affairs.

Hodge, who has the authority to instigate an inquiry, said the head of HMRC would be testifying to the PAC, which is tasked with ensuring value in government financial affairs, next month and that she expected questions about Starbucks to be raised.

There was no evidence that Starbucks had been engaged in any kind of wrongdoing.

HMRC does not comment on individual taxpayers and rejected any challenge to its efficacy.

"We make sure that multinationals pay the right tax to the UK in accordance with UK tax law," it said in a statement.

Conservative MP Steve Baker also called for an inquiry.

"I am a highly free market person but what I want is simple transparent tax law that is actually obeyed ... there are some serious questions to answer here," he said.

Taxpayer confidentiality means HMRC would not be able to confirm a probe even if it does launch one.

Baker and Hodge said the Government could get around this and reassure the public the matter was not being ignored, by it confirming in parliament that an HMRC probe was taking place.

Labour MP Michael Meacher said he planned to table a motion in Parliament asking the Government to launch its own investigation into Starbucks, and potentially, other big companies which are paying minimal taxes on big UK revenues.

The MPs said such investigations should also lead to recommendations on how to change tax law to prevent companies from shifting profits overseas.

Starbucks declined to say if it was considering any changes to its accounting practices but said it was "totally committed to the UK".

"Starbucks pays and will continue to pay our share of taxes in the UK to the letter of the law," Kris Engskov, Managing Director of Starbucks Coffee UK, said in a blog on the company's website.

He went on to note Starbucks' contribution to the UK economy as an employer and as a customer for farmers and cake makers.

Unions said the Reuters story on Starbucks showed the Government needed to do more to close loopholes that allow companies avoid taxes.

"Hardworking families are being forced to pay off the deficit while companies like Starbucks laugh all the way to the bank," said Unite general secretary, Len McCluskey.

The Northern Ireland Committee of the Irish Congress of Trade Unions called for a boycott of the cafe chain, a call echoed by some MPs.

"Support local cafes and bars, and send Starbucks and other tax dodgers a clear message - Unless you contribute to society, this society has no cash for your coffee," said ICTU Assistant General Secretary, Peter Bunting.

Reuters

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
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

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

Where the spooks get their coffee fix: The busiest Starbucks in the US is also the most secretive

The secret CIA Starbucks

The coffee shop is deep inside the agency's forested Virginia compound
Revealed: How the Establishment closed ranks over fallout from Loch Ness Monster 'sighting'

How the Establishment closed ranks over fallout from Nessie 'sighting'

The Natural History Museum's chief scientist was dismissed for declaring he had found the monster
One million Britons using food banks, according to Trussell Trust

One million Britons using food banks

Huge surge in number of families dependent on emergency food aid
Excavation at Italian cafe to fix rising damp unearths 2,500 years of history in 3,000 amazing objects

2,500 years of history in 3,000 amazing objects

Excavation at Italian cafe to fix rising damp unearths trove
The Hubble Space Telescope's amazing journey, 25 years on

The Hubble Space Telescope's amazing journey 25 years on

The space telescope was seen as a costly flop on its first release
Did Conservative peer Lord Ashcroft quit the House of Lords to become a non-dom?

Did Lord Ashcroft quit the House of Lords to become a non-dom?

A document seen by The Independent shows that a week after he resigned from the Lords he sold 350,000 shares in an American company - netting him $11.2m
Apple's ethnic emojis are being used to make racist comments on social media

Ethnic emojis used in racist comments

They were intended to promote harmony, but have achieved the opposite
Sir Kenneth Branagh interview: 'My bones are in the theatre'

Sir Kenneth Branagh: 'My bones are in the theatre'

The actor-turned-director’s new company will stage five plays from October – including works by Shakespeare and John Osborne
The sloth is now the face (and furry body) of three big advertising campaigns

The sloth is the face of three ad campaigns

Priya Elan discovers why slow and sleepy wins the race for brands in need of a new image
How to run a restaurant: As two newbies discovered, there's more to it than good food

How to run a restaurant

As two newbies discovered, there's more to it than good food
Record Store Day: Remembering an era when buying and selling discs were labours of love

Record Store Day: The vinyl countdown

For Lois Pryce, working in a record shop was a dream job - until the bean counters ruined it
Usher, Mary J Blige and Will.i.am to give free concert as part of the Global Poverty Project

Mary J Blige and Will.i.am to give free concert

The concert in Washington is part of the Global Citizen project, which aims to encourage young people to donate to charity
10 best tote bags

Accessorise with a stylish shopper this spring: 10 best tote bags

We find carriers with room for all your essentials (and a bit more)
Paul Scholes column: I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England

Paul Scholes column

I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England
Jessica Ennis-Hill: 'I just want to give it my best shot'

Jessica Ennis-Hill: 'I just want to give it my best shot'

The heptathlete has gone from the toast of the nation to being a sleep-deprived mum - but she’s ready to compete again. She just doesn't know how well she'll do...