Starbucks faces unpaid tax claims

16 October, 2012

The tax bill of global coffee giant Starbucks has come under scrutiny this morning – after it was revealed it paid nothing in UK corporation tax last year.

A special report by Reuters claimed the group has paid just £8.6m in taxes on its UK sales since 1998, when it launched its first UK coffee shop, despite turning over more than £3bn during the period.

The tax moves by Starbucks have been criticised by tax campaigners and a Labour MP, although there is no suggestion the company has broken the law and, worldwide, its tax rate stands at 31%.

Last year, Starbucks UK made a £32.9m loss, but costs of sales listed with Companies House were a staggering £319m, which included £124m in staff costs, an undisclosed amount of money paid in rent, and an £8.9m tax credit from 2010.

This left a gross profit of £78.4m, against which £107.2m of administrative expenses were charged. The result was an operating loss of £28.8m and a loss before tax of £32.9m. It is these administrative costs that are being questioned.

However, its nearest rival Costa had £101m of sales costs against its £377m of 2011 revenues and administrative expenses of £36.3m. Its operating costs were £49.3m and its taxable profits stood at £49.7m.

Michael Meacher, the Labour MP for Oldham West and Royton, said: “HMRC should be having a look at this, especially since they keep saying there should be a crackdown. This has been going on for years and there are many companies involved. The fact they have paid 0.3% tax on their turnover is utterly scandalous. If they didn’t think they could get away with it, they wouldn’t dare do it.”

HMRC said: “For legal reasons, we cannot comment on the tax affairs of individual businesses, but we make sure that multinationals pay the right tax to the UK in accordance with UK tax law. Our tax rules combat tax avoidance and we employ specialist tax professionals to ensure that multinationals play by the rules.”





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