It cuts both ways: The man who took Caffe Nero to task over its tax affairs
If you run a national coffee shop chain and see Steve Pottinger on his way to one of your shops for his morning latte, a swift call to your accountant may be advisable.
The 51-year-old’s letter to Caffe Nero, in which he symbolically enclosed his loyalty card in protest at the chain not paying any UK corporation tax, has been shared thousands of times on social media – and it’s not the first time he’s had to switch brands.
“The idea that they were somehow getting away with not paying annoyed me, especially because I’d actually moved to drinking occasionally at Caffe Nero when I stopped going to Starbucks because they were dodging corporation tax,” he told The Independent. “Part of it was almost a feeling of betrayal: ‘What – you’re doing it as well!’”
In 2012 Starbucks came under fire after it emerged that it had not paid any corporation tax in the UK for the previous three years. Following pressure from politicians it has since started paying tax and last month said it was moving its European head office to the UK from the Netherlands, meaning it will be liable to pay more.
At the time, Mr Pottinger vented his anger at the coffee chain by refusing to buy its products and composing a protest poem about it entitled “No-one likes an angry poet”, which he uploaded to YouTube.
He said he became angry about Caffe Nero a few weeks ago when he read a newspaper article stating that the company made a pre-tax profit of £21.1 million in 2013 but paid no corporation tax, despite running more than 500 cafes in Britain. The firm has rejected similar tax avoidance accusations previously, saying tax-deductible interest payments on debt used to buy the business mean it has not been liable for corporation tax.
In the letter, Mr Pottinger wrote: “I’m aware that what you do is perfectly legal... but at a time of austerity when vital services face cutbacks, it sticks in the craw. Loyalty cuts both ways. But you seem to have a disconnect when it comes to your responsibilities to paying your dues.”
He told The Independent he had been particularly incensed as his elderly father had just been discharged from hospital, where he had been receiving crucial treatment courtesy of the NHS.
“If you’re just looking at figures on a sheet, it’s just figures on a sheet – they don’t have any repercussions. But when companies avoid tax that has direct implications on what there is in the pot and therefore what happens when people need healthcare,” he said.
“Moaning about tax is a popular pursuit, but at the same time without taxation we don’t have schools, hospitals, teachers, nurses – all the good things that make our society one that we’re actually incredibly lucky to live in.”
Mr Pottinger, who works in the music industry but also performs his poetry around Britain, said he found the attention his letter had received on social media “vaguely surreal”, but that it had been “20 minutes well spent”.
He added: “About 24 or 48 hours after I posted it on Facebook I remember being hugely excited that it got to 300 shares and exceeded my wildest expectations. And then I got up the next day and everything had started gathering speed like an increasingly large snowball.”
Having now all but run out of chain coffee shops, he said he intended to give a few independent establishments a try.
Mr Pottinger has since received a letter from Caffe Nero’s head of customer services, Justina Virdee, in which she said: “I can assure you we don’t take what you have said lightly”, and offered to send a representative from the company to meet him and discuss his concerns.
It is understood that the tax-deductible interest payments on the debt used to buy Caffe Nero are made to British banks and that the firm does not engage in “transfer pricing”, where a part of a multinational firm based in one country charges another in a different tax jurisdiction for services.
The company declined to comment.
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