If nothing else the questioning of the country’s top taxperson was a study in exasperation today. Understandably, the Commons Public Accounts Committee was eager, desperate even, to find out from Lin Homer, HMRC’s chief executive, how it was that Starbucks managed to pay a trifling £8.6million in corporation tax on UK sales of - wait for it - £398million.
The first problem was that HMRC does not discuss individual taxpayers, if a global giant with 600 outlets in Britain alone, can be so described, meaning that Committee chairman Labour’s Margaret Hodge took to referring it as “the company we are not allowed to name” Ms Hodge, it must be said, does exasperation extremely well - a strangled, incredulous “ha” here, a tight little shrug of her elegant shoulders there, as if her whole body was convulsed by frustration. “You can’t say that,” she said in response to one of Ms Homer’s blander answers.” She can,” the equally exasperated Tory Richard Bacon told her. “She just did.”
Last month the chain’s finance chief told the Financial Times that “I look forward” to it paying more tax. Had he harboured a fervent desire to hand billions to the Revenue but had been prevented by hidden forces? No it was merely that they had lost a packet on a mistaken “land grab” in its early days - and had to pay a mysterious six percent “royalty” to the Netherlands regional HQ.
The Bacon-Hodge duo, who work a kind of cross-party hard cop, hard cop routine, were unimpressed. Saying - without naming names, of course - Bacon said it “beggars belief that such a a large entity can pay so little in corporation tax” only, it seemed, possible because the company had been “architected” that way. The syntax was terrible but the meaning clear.
So exasperated was the committee that at times it rode roughshod over the answers from the - to be fair, unintimidated - Ms Homer, who at one point pleaded to get a word in edgeways. She insisted that HMRC was working well within agreed rules and procedures. In that case, for the public, said Bacon “you’re making a really bad job of explaining it.”
Starbucks is only one example of the low tax multinationals reeled off by Ms Hodge today, including Google, Amazon, Asda, Facebook, Intel, Kraft, Coca Cola. But it is the first expected to appear before Ms Hodge next week. You can only wish them luck.
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