The UK needs to "beef up" action against tax avoidance and subterfuge by big firms, Business Secretary Vince Cable said, accusing some of engaging in "systematic abuse".

He said he did not know whether coffee giant Starbucks was making a loss on its UK operation – the reason it gives for paying little or no corporation tax.

It was one of several multinationals that endured a grilling by MPs last week amid anger at the use of overseas bases and other tactics to avoid tax.

Mr Cable said the UK had to be an "attractive place" to do business, but more should be done to crack down on tax "dodging".

"We need inward investment and we need companies coming from all over the world so we need to make this an attractive place," he said. "But while they are here, if they make profits they should pay tax on their profits.

"There is nothing more galling to small and medium-sized companies that pay their tax to the British Government and we find these people dodging it."

Mr Cable said it was "completely unacceptable where there is systematic abuse taking place", but that it was tough to get to the bottom of the often-complex operations.

"Starbucks claims they are making losses in the UK. I don't know whether they are not, but you would need intensive investigation by the Inland Revenue to establish what exactly is going on – whether their transfer prices and their royalties are being fiddled."