How do guests at The Ritz feel about it not paying corporation tax?
The Ritz, perhaps Britain’s most instantly recognisable hotel, is facing the prospect of being targeted by protest groups as early as next month over revelations that it has not paid any corporation tax in the last 17 years.
But, while the world-famous hotel has become the latest major company to be caught up in the corporate tax controversy, there was little sign of the sort of public anger aimed at firms like Starbucks among those staying there today.
Instead, some customers told The Independent that - while they thought the company had a moral responsibility to pay into the public purse - the onus must be on the government to crack down on any which legally avoided paying tax.
“If what they are doing is not illegal, then they are not doing anything wrong,” said one visitor to the Ritz, who did not want to be named. As the man waited for a taxi outside the hotel’s side entrance, he said: “It is the government’s fault if firms are able to employ strategies to minimise their taxes, the politicians need to sort out the loopholes.”
Another guest, a Yorkshireman who lives in Kazakhstan where he works for a major oil firm, said it was the moral responsibility of companies to “give something back” but that it was difficult to see a firm paying tax it is not forced to.
The man, who did not want to be named, spoke as he stood outside the hotel. Referring to the attitudes of some of its customers towards the issue – which contrasts the outrage directed at Starbucks by some of its customers - he added that there were some “enormously rich people in there who simply live in a different world”.
He said that he himself was once registered as non-domiciled in the UK but changed his status to pay UK tax because he wanted to pay into the system. He said: “I believe in a fair and just society but it is the laws which need to be changed, not the companies.
“If someone has a clever accountant, is that the real problem when there are also a lot of people who evade tax illegally? I do think that companies have a moral responsibility and obligation to pay something to help society. If I was the chief executive of a large business and I found that it was complying with tax laws [while avoiding UK tax], I would consider giving some money to charity in order to fulfil that obligation.”
When it was revealed to have employed a tax avoidance scheme, a public backlash prompted Starbucks to agree to pay Her Majesty’s Revenue and Customs a lump sum over the next two years and to consider changing its structure to pay UK corporation tax.
UK Uncut, the anti-tax avoidance group which carried out a high profile demonstration down the street from the Ritz at Fortnum and Mason last year, is believed to have added the world-famous hotel to the list of firms to be considered for future action.
UK Uncut member Sarah Greene said: “It is an outrage that the government continues to let the super wealthy and big businesses dodge millions in tax while vital services like refuges and rape crisis centres, benefits and the NHS face the axe.
She added that cracking down on tax avoidance schemes could “bring in billions”, which could “fund vital services…but are instead using the deficit to justify the cuts which are devastating people’s lives”.
Ms Greene said: “The government must close the tax loopholes companies use to avoid paying billions in tax to the UK. We don’t need cosmetic changes, tweaks around the edges or promises of months of talking - Osborne needs to take urgent action now to tackle widespread tax avoidance by some of the biggest companies in the UK instead of making single mothers, disabled people and people on low wages pay for the economic crisis we did not cause.”
It is understood, however, that the group will not be deciding its next target before the new year.
The comments came after a BBC report unveiled the Ritz’s tax arrangements. Aidan Barclay, who runs the UK operation on behalf of its joint owners the Barclay brothers, said that the Ritz had not paid any dividends, and profits from the hotel had been reinvested.
Mr Barclay, son of Sir David Barclay said: “The Barclay family members and their companies abide by the law and pay the taxes required by UK law and the laws of other relevant countries.”
His father said: “We have always acted in a responsible way with regard to taxation and have never been involved in any tax avoidance scheme. We are not responsible for corporate taxes in the UK and are unaware what tax is paid on the Ritz.”
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