Starbucks completes £20 million tax payment as coffee chain seeks to put scandal behind

Starbucks came under intense scrutiny after it emerged it paid virtually no corporation tax for its UK division

Simon Neville
Monday 01 December 2014 17:34
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Starbucks has made its final £5m payment to the taxman after it was exposed for paying virtually no corporation tax in the UK since launching here 16 years ago.

The coffee chain has now paid £20m to the Government after it faced protests and boycotts following the revelations, which led to questions raised in parliament and an investigation by the Public Accounts Committee.

The coffee chain said it wants to put the scandal behind it and will turn a profit in the UK within three years and start paying taxes regularly.

New chief executive Mark Fox also called on international governments to draw up a more coherent tax system and hit out at an ongoing EU investigation suggesting Starbucks set up a sweetheart deal with officials in the Netherlands.

He said: “We’re two years into a five year journey of fundamentally changing our business from unprofitable to profitable.

“There is nothing abnormal about the way Starbucks is run in the UK. What is abnormal is that we haven’t been making a profit and that’s what we’re addressing.

“With the growth and strategy we have in place I’m very sure that that will change in the not too distant future.”

He added that customers are continuing to flock to stores and the initial dip in business in 2012 has now recovered.

“As I look at the business now with eight quarters of growth, I don’t see a damaged brand, I see a brand that is starting to regain its mojo.”

With around 500 stores across the UK, he hopes to open 100 a year but make them unique to their local surroundings, and challenge the 1700 stores run by larger rival Costa.

Accusations remain at the European Commission that royalties paid from subsidiaries around Europe to its Netherlands base varied year to year, however these were denied.

“I pay a standard 6 per cent royalty from the UK business. There is an investigation but the Dutch government don’t believe there is an issue and neither do we. Six per cent is what we pay.

“It’s coming round to a debate where it needs to be the policy makers that change things. There needs to be a system that’s understandable, comprehensible and works.”

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