Starbucks 'paid just £8.6m UK tax in 14 years'

estebanrey said:
And as someone said above, you pay duty on the fuel you put in your car but that doesn't mean you are morally in the right to then avoid road tax (or VED for the pedants).
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Yes but we have to pay both legally.....Starbucks don't.

They should pay more but not until they have to. They buy a product that keeps a company in business, transportation of said product keeps other people in a job and they employ people in the shops to sell the product. All of these people pay PAYE and individual companies pay VAT + PAYE too.

They need to sort the loophole really.

Buy for £1 pay £1.20 inc vat, sell for £2 and take 33p of that in vat, then pay the difference of 13p to the magical pot of doom.

Edit: Someone correct me if I'm wrong working that out. Sure it is x 8/48
 
weringo said:
To pay more tax than the company is legally obliged to would be a breach of the Director's Duties outlined in the Companies Act 2006.

So who is really to blame here?
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That's certainly true, directors have a legal obligation to do what's best for their shareholders.
 
steve-h said:
Oh, of course you'd never engage in violence in your personal life, but you're more than happy to support it as long as it's someone else who is initiating it. Out of sight, out of mind and all that cowardly goodness.
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See you in a week or two.


you are so astute
 
Jonny ///M said:
Yes but we have to pay both legally.....Starbucks don't.

They should pay more but not until they have to. They buy a product that keeps a company in business, transportation of said product keeps other people in a job and they employ people in the shops to sell the product. All of these people pay PAYE and individual companies pay VAT + PAYE too.

They need to sort the loophole really.

Buy for £1 pay £1.20 inc vat, sell for £2 and take 33p of that in vat, then pay the difference of 13p to the magical pot of doom.

Edit: Someone correct me if I'm wrong working that out. Sure it is x 8/48
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But it's not a loop hole, it's circumvention by Starbucks plain and simple. And it seems everyone and his dog saying it's the tax system's fault and how it needs 'sorting' but yet very few solutions.

The fact is we have something called corporation tax, which is a tax on your profits. It would be unfair to base it on sales alone because if a company makes a loss it would be obviously unfair to tax them further and make it worse hence why it's only paid on profits.

What Starbucks are doing is claiming they are making no profits because despite making a ton of money in sales they choose as a company to set up subsidiary companies off shore who then 'charge' Starbucks UK a fee (for something or other) which is so high it wipes out any profits meaning they can tell the tax man they don't owe anything. But in reality that money has simply moved out of the country but stays within Starbuck's owner's pockets.

That is not just 'following the rules' as some posters are saying. It is legal but let's not pretend that Starbucks aren't setting up convoluted systems for the sole purpose of avoiding pay tax.

The so-called 'loop holes' people talk about aren't mistakes in tax legislation, they are normally genuine tax relief schemes there for noble purposes (reductions for charitable giving would be an example of such a 'loop hole'), the problem comes when people use them for only reducing their tax and not for the reason they are meant for.

You could never have a 'simple' tax system despite what people want to believe and if you removed all exemptions it would have negative effects as well.

What I think we need is to simply make tax exemptions and tax reduction schemes only available to those that specifically apply for them. ATM, it's down to the person or company to decide if they want to use them when it should be for HMRC to judge whether you get it or not.
 
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estebanrey said:
But it's not a loop hole, it's circumvention by Starbucks plain and simple. And it seems everyone and his dog saying it's the tax system's fault and how it needs 'sorting' but yet very few solutions.

The fact is we have something called corporation tax, which is a tax on your profits. It would be unfair to base it on sales alone because if a company makes a loss it would be obviously unfair to tax them further and make it worse hence why it's only paid on profits.

What Starbucks are doing is claiming they are making no profits because despite making a ton of money in sales they choose as a company to set up subsidiary companies off shore who then 'charge' Starbucks UK a fee (for something or other) which is so high it wipes out any profits meaning they can tell the tax man they don't owe anything. But in reality that money has simply moved out of the country but stays within Starbuck's owner's pockets.

That is not just 'following the rules' as some posters are saying. It is legal but let's not pretend that Starbucks aren't setting up convoluted systems for the sole purpose of avoiding pay tax.

The so-called 'loop holes' people talk about aren't mistakes in tax legislation, they are normally genuine tax relief schemes there for noble purposes (reductions for charitable giving would be an example of such a 'loop hole'), the problem comes when people use them for only reducing their tax and not for the reason they are meant for.

You could never have a 'simple' tax system despite what people want to believe and if you removed all exemptions it would have negative effects as well.

What I think we need is to simply make tax exemptions and tax reduction schemes only available to those that specifically apply for them. ATM, it's down to the person or company to decide if they want to use them when it should be for HMRC to judge whether you get it or not.
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Then it becomes the only people who pay it are those who can't take some high flyer out to business?

What would you do then? Tax them heavily and they don't have as many shops here, less people employed, even more empty streets and
no doubt some other way they can not pay the money.

It's not fair sometimes and in what I do we find it hard to compete as people can buy products that are brought into Britain as grey imports and heavily discounted to near what we pay as a shop and sold online making small margins. All part of EU trade rules or whatnot but it's not illegal.
 
They are legally obliged to pay the minimum tax possible, if they didn't the shareholers would be quite right to hold them in dereliction of duty.

The problem is the tax system, not the company
 
I don't geddit. You guys are so far off the mark with your understanding of the tax system in this country.

It would be like me commenting on how engineers should build oil rig platforms. Madness
 
Starbucks are simply doing what they are allowed to but I feel that they are pushing the ethical and some would contest legal limits of transfer pricing. In saying that, their auditors seem comfortable with the rate they set, however it would be interesting to see which other companies are recharging their IP as a cost to tax efficient subsidiaries.
 
Don't be too hard on starbucks they employ lots of immigrants on min wage who are 20 to one flat so they pay little rent and send all the money home.
So as you can se they are a great benefit to our economy.
 
steve-h said:
You're the one dishing out the personal insults ;)
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lol wut... are you really that stupid? do you honestly think i said that because i thought you were going to get a ban whilst being blissfully unaware i just used a personal insult against you.

hurrr derrrrrrrrrr
 
sldsmkd said:
They are legally obliged to pay the minimum tax possible, if they didn't the shareholers would be quite right to hold them in dereliction of duty.

The problem is the tax system, not the company
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Usually I'd agree, but they're doing some interesting things such as taking out loans on behalf on the UK subsidiarity from other branches in lower corporation tax areas and then paying them back at huge interest rates to make the UK arm seem non-profit making. They are effectively generating enough costs in the UK arm to balance any profits despite the fact there is no need for these ICP transactions other than avoiding tax.

Perhaps we do need to outlaw this, but that will end up costing us more money to enforce and administer it.
 
SpeedFreak said:
Starbucks are simply doing what they are allowed to but I feel that they are pushing the ethical and some would contest legal limits of transfer pricing. In saying that, their auditors seem comfortable with the rate they set, however it would be interesting to see which other companies are recharging their IP as a cost to tax efficient subsidiaries.
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The thing to check is whether there is a potential liability recorded on the balance sheet for any unresolved TP issues. Either HMRC agree the valuation put on the intra group charges or they are contesting them (in which case a liability would be recorded by the auditors.)
 
estebanrey said:
What Starbucks are doing is claiming they are making no profits because despite making a ton of money in sales they choose as a company to set up subsidiary companies off shore who then 'charge' Starbucks UK a fee (for something or other) which is so high it wipes out any profits meaning they can tell the tax man they don't owe anything. But in reality that money has simply moved out of the country but stays within Starbuck's owner's pockets.
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Actually I believe the offshore charges are mostly the original US company's charges and royalty fees.

Starbucks as a whole don't actually do much tax avoidance per se, they just move all their profits to the US by the looks of things and pay tax there. Multinationally that's actually "moral" in the grand scheme of things, they don't actually move profits to low tax havens, in fact the US is a higher tax rate than the UK.

Globally Starbucks pay 24.5% in tax, which is roughly 4.6% of revenues. They're not avoiding tax so much, just choosing to have it all in the US. Weirdly.
 
Snax said:
The thing to check is whether there is a potential liability recorded on the balance sheet for any unresolved TP issues. Either HMRC agree the valuation put on the intra group charges or they are contesting them (in which case a liability would be recorded by the auditors.)
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That is so easy to argue away to an auditor it's unbelievable. Just evidence you're likely to win the case effectively.
 
Pudney said:
Actually I believe the offshore charges are mostly the original US company's charges and royalty fees.

Starbucks as a whole don't actually do much tax avoidance per se, they just move all their profits to the US by the looks of things and pay tax there. Multinationally that's actually "moral" in the grand scheme of things, they don't actually move profits to low tax havens, in fact the US is a higher tax rate than the UK.

Globally Starbucks pay 24.5% in tax, which is roughly 4.6% of revenues. They're not avoiding tax so much, just choosing to have it all in the US. Weirdly.
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True, tax laws and DTR do try in some way to ensure that you pay the overall correct level of tax as if all profit was in your home country. I guess the real question is if there is a moral obligation on a company to pay tax on profit in the country in which it is generated...

I will say this, there is a lot to be said for supporting local business or any company that pays it's tax to HMRC rather than exporting profits to be taxed overseas (even if the company itself is incurring the same overall charge).
 
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