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Starbucks talks to HMRC about UK tax approach

STARBUCKS, the US coffee giant, has bowed to public pressure after it emerged it is planning to change its operating system so it will end up paying corporation tax in the UK.

The company, valued at £25 billion, has been stung by widespread criticism about the way it operates in Britain, which last year meant that, despite sales of nearly £400 million, it paid no tax on profits. Some politicians including, it appears, Danny Alexander, the Chief Secretary to the Treasury, have boycotted Starbucks over the tax issue.

The coffee giant was one of three companies, along with Google and Amazon, labelled "immoral" by MPs in a damning report for the way it minimises its tax payments, albeit legally.

Labour's Margaret Hodge, who chairs the Commons Public Accounts Committee, said its report showed multinationals operating in the UK had been allowed to get away with "ripping off" taxpayers because of a weak tax authority, poor legislation and a lack of international co-operation.

Ms Hodge revealed she had been boycotting Starbucks, Amazon and Google since the revelations over tax emerged.

"No, I don't now [go to Starbucks]. I've stopped my Amazon. I've completely stopped my Amazon – I'm a Kindle fanatic so that's been a bit of a difficult one. Google I find more difficult," she said.

Mr Alexander over the weekend suggested he too had boycotted Starbucks, saying: "I might be able to buy a coffee from Starbucks again soon," but when asked yesterday stressed that he was a "tea drinker", so he did not tend to visit the coffee outlet.

Starbucks, which has admitted being in contact with the Treasury and HM Revenue & Customs to discuss its "tax approach" in the UK, declined to comment on suggestions it was about to change its ways and pay corporation tax in Britain.

A spokeswoman stressed how the company was committed to the UK for the long term, having invested more than £200m during the last 12 years, and that it had complied with "all the tax laws in this country" but had not been as profitable as it would have liked.

She told The Herald the company had listened to feedback from its customers and employees and understood that to maintain and further build public trust it needed to do more. "We are not commenting on details at this stage," she added. The company intends to make a statement later this week.

The UK Government yesterday unveiled plans for a £10 billion crackdown on tax dodging by multinationals and wealthy individuals, involving offshore funds.

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