Starbucks says it will start paying more UK tax - but baristas face cutbacks


Starbucks has bowed to the public outcry over its tax affairs and agreed to amend its operation, increasing its rate of corporation tax contributions, but 7,000 of the coffee giant's staff in the UK are now faced with cutbacks to their paid lunch breaks and sick leave.

The company has been using an arrangement which sees it transferring much of its UK profits to the Netherlands to legally reduce its taxable income. As a result, it has paid corporation tax only once in the fifteen years since it opened its first UK store.

But Starbucks has said that, while its UK subsidiary will continue to be charged the 4.7 per cent rate by its Dutch counterpart for use of the Starbucks brands, it is planning to stop using that deduction to reduce its UK tax bill.

The coffee chain paid no tax last year on the £400m it took in sales. If it decides to go ahead with the plan, it will be announced before the Chancellor George Osborne’s Autumn Statement to the House of Commons on Wednesday, the BBC reported.

Meanwhile, baristas at the firm's 750 stores have been told to sign employment terms that include the removal of paid 30-minute lunch breaks and paid sick leave on the first day of illness, The Guardian reported last night. Starbucks said the 30-minute break should not be paid for as it was "meant to be a break from work". A spokeswoman said changes were "unrelated" to the tax affairs

The Chancellor also promised Her Majesty’s Revenue and Customs an extra £77m in funding over two years to “go after” aggressive avoiders and evaders, branding the behaviour “unacceptable”. He said: “It is very important that people who try to avoid their taxes understand that we are going after them.

In a statement, Mr Osborne warned that the “minority” who avoid paying their fair share, sometimes by breaking the law” to expect a crackdown. He said: “The action... will help HMRC close in not only on those who seek to avoid or evade tax, but on the dubious ‘cowboy’ advisers who sell them the schemes and dodges they use to cheat the law-abiding majority.”

Chief Secretary to the Treasury Danny Alexander said: “In restoring the public finances, our first priority must be to tackle those who avoid or evade tax.

“It is simply not fair that at a time when most people are making a contribution to balancing the nation's books, there is a small minority of taxpayers who try to escape their responsibility.”

Start your day with The Independent, sign up for daily news emails
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific