[Closed] Starbucks and Corperation Tax (Sorry)

I saw some protesters outside one of the Bristol Starbucks today - wanting them to pay their taxes.

Silly sods.

I believe Costa coffee pay around £15m in corporation tax.

Some of the highest bonuses in the city are paid to accountants who mitigate their companies tax bill.

Over the last three years Starbucks have taken £1.2 Billion in the UK.

Not sure what their (genuine) Profits were, £20 Million over 2 years doesn't seem to cover it.

I would reckon on them owing almost double that in Back taxes for the last 3 years (if they filed legitimate figures) not counting what they would also accrue over the next two years.

Is corporation tax 20%?

Shall I [s]google[/s] use a search engine that pays tax that for you al?

I would imagine what neal says is true

For the sorts of profit Starbucks should be reporting it is 24% for 2012, 23% for 2013.

I would imagine what neal says is true

I wouldn't bank on it Squire.

I used a "tax free" search engine 😉

i'd imagine that the figure that starbucks have decided to pay is somewhere around the amount their accountants figure they will lose in profits if the protests continue.

Tootall you say silly sods but...

As I understand it Starbucks haven't changed their tax structure at all. They have just nominated to give hmrc 20mil over 2 years. The protestors claim this comes form PR budget (which makes sense).
As I understand it they haven't changed their infrastructure at all, and after this 20mil currently don't propose to pay anything further.

It's a ****ing joke if you ask me. But it's hmrc that needs to sort.

And what about Ebay and Paypal?
Raking in huge profits from UK sales.....lets make all these companies pay their way in the society in which they opperate.

Crap overpriced coffee anyway. Too many silly sods out there anyway contributing to their huge takings.

Nice toilets though.

They don't owe HMRC anything - their tax arrangements are legal (if HMRC have checked the documentation that justifies the transfers to overseas operations properly)

What they do may be viewed as immoral, especially in these days of all being in it together, and offering a free donation to HMRC is either

a) a superficial and cynical PR exercise

b) a sign that a company that prides itself on it's ethical treatment of coffee growers etc has seen the error of it's ways.

You decide.

For the sorts of profit Starbucks should be reporting it is 24% for 2012, 23% for 2013.

Should be, is the key word there, on paper they don't make any profit.

One division of Starbucks based in a tax haven sells it's coffee to another at an above market price. That division then 'roasts' it and then sells it on at an even higher price to the UK shops. The UK shops are now buying coffee at a higher price than they could probably get it from the local Co-Op.

Meanwhile, another sister division is 'charging' the UK shops a 'royalty fee' for allowing them to use the Starbucks brand... All of these costs are thrown into their costs which means they invoice themselves with overpriced costs to ensure they don't make a profit..

The nobedds like UK Uncut who are targeting these companies are wasting their time, the UK government has allowed this to happen by leaving huge massive gaping holes in their tax system. Close the holes and reap the rewards, Starbucks won't close down their shops because they have to pay tax.

Ill go for a out of those options. Particularly as they has pretty much said they are only doing it because they have listened to their values customers (boycotting)

As I said its an hmrc issue. The concept that if hmrc come down hard all these companies will up sticks and leave the uk is a ****ing joke. They need to get tough and sort it out. For all companies. Now.

As I understand it Starbucks haven't changed their tax structure at all. They have just nominated to give hmrc 20mil over 2 years. The protestors claim this comes form PR budget

and protesting outside a branch of Starbucks will not make them change - pointless action.

I'm sure I read that the US Corporation tax is paid on turnover, not profit. That would seem to negate some of the money-shuffling exercises highlighted above?

The £20 million is a drop in the ocean. Starbucks are quoting 15% margin in their accounts for the UK operation. This raises an interesting point for me. Are they:
a telling the shareholders lies?
or
b evading tax in this country?

Either of these leaves some serious questions to be asked by authorities in the US or UK.

I know what the tax law states so no need for a c, d or e, Maybe we should base the corporation tax take on the margin declared in the audited accounts that are given to the shareholders.

Does the argument that if HMRC chase these non payers for tax then they'll leave the UK hold true? The way i've always thought about it is that if UK consumers have cash to spend then some entrenpeneur(sp?) will find a way to releive them of their cash, and if they are UK based rather than a multi national then HMRC get to collect the tax. I've just never heard anyone argue this on Newsnight etc.

and protesting outside a branch of Starbucks will not make them change - pointless action

I don't agree, public outrage at their (perfectly legal) tax arrangements seems to have prised a grudging £20 million out of them.

However, since Starbucks have a responsibility to their shareholders to minimise their tax outgoings and maximise profit, the onus is on HMRC to put in place mechanisms which make them pay taxes where the revenue is actually generated. And it's right that they should do so, since it's this country that's supplying them with a relatively prosperous consumer base with a love of hot milky drinks.

BTW, has anyone looked at the tax arrangements of UK companies trading in the US?

The market as currently configured is stacked against the local operator based in the country of origin. They have no option but to pay all the taxes that their government requires.
This removes money that they could use to invest from their accounts while the multi-nationals get a free pass. Our law-makers need to get their thinking caps on and ensure that all business pays taxes based on profits generated in the country they do business.

BTW, has anyone looked at the tax arrangements of UK companies trading in the US?

People in the US ? 😉

for us mere mortals im sure HMRC can change the law retrospectively

ie if they didnt get "you" first time round they can change the rules and regs and go back a few year to get the shirt off your back

however a big corporation like that can tell HMRC what they are going to give them

its a tough old world innit

and protesting outside a branch of Starbucks will not make them change - pointless action.

Protesting outside (inside, actually) a few coffee shops has generated this thread and lots of news coverage. That's what it's about, not making Starbucks change its accounting procedures.

The only way HMRC/government is going to change anything is if it's in the pubic eye.

Isn't the issue here that EU rules quite specifically prevent any member country introducing a law which restricts companies like Starbucks from housing themselves in another jurisdiction.

UK government can't do a thing about it, unless we leave the EU!

It may encourage people to use coffee shops that do pay corporation tax in this country. This would unfortunately hurt Starbucks franchise holders in this country.

Protesting outside (inside, actually) a few coffee shops has generated this thread and lots of news coverage.

Perhaps. But, as I come back to - doing it outside a Starbucks in Bristol on Saturday was a little late.

Not seen any protests against Amazon etc or would that be a bit too difficult?

It may encourage people to use coffee shops that do pay corporation tax in this country. This would unfortunately hurt Starbucks franchise holders in this country.

I'm not sure that Starbucks has any private franchisees in the UK yet.

I seem to remember reading that they were planning to, this year some time, but don't know if its actually happened yet.

There was a guy in the audience on Question Time when this blew up that said he was a franchise holder. I am only going on that.

He probably has a partnership deal rather than being a Proper Franchisee.

A larger business with a lot of footfall that has a small Starbucks within it, with a share of profits going to the main business owner, but not an actual franchise that's owned by the main business owner.

Starbucks were aiming to open 200 "Real" Franchises between the end of this year and 2017

Although I would imagine that anyone who was looking into buying one is now having second thoughts 🙂
A Big investment to make in a company that's getting such bad press.

The only way HMRC/government is going to change anything is if it's in the pubic eye.

😯

Too little too latte if you ask me; makes a mocha-ry out of the system.

Cant see the problem.

I love the way they've dressed up, with their full page press ads etc, actually paying tax on their substantial profits, as some grand philanthropic 'ethical' gesture!

I might start making elaborate pronouncements when I pay my tax every month. Strokers!!!

There is an Amazon boycott underway. I have to admit that I wouldn't have thought about it before, but the publicity and protests have made me think about buying from alternatives.
Interesting article in the paper yesterday, where they interviewed the founder of Lush, who paid 42% tax on 21m profit last year. He basically admitted he was a bit of a mug paying full whack, but he thinks it's the right thing to do.
You can blame HMRC, but some people are doing the right thing even if the law isn't forcing them to.

and protesting outside a branch of Starbucks will not make them change - pointless action.

Yeah, why protest outside - its a bit parky, why not protest inside, or even protest from the inside. The staff at Gretna services starbucks were striking their own mighty blow for freedom on Friday. More of a dirty protest though. 3 customers seated, one being served. Dirty cups on pretty much every table. Solidarity sisters! 🙂

Its just a PR stunt by Starbucks to try and restore the recent loss of business. Nothing more, nothing less.

Also there is no point in ranting at HMRC as they dont make the rules. The rules are made by the government so the chancellor needs to get off his ar$e and sort out the tax code. He wont because he's not that bothered about closing the loopholes or making it simple, too much money to be made for City types from an overly complex tax code.

Again, no he doesn't, and no he can't - you still don't seem to get it!

Dating all the way back to [i]Humblet v. Belgium[/i] in 1960, It is clearly established that EU law trumps the national tax rules of the EU member states where they conflict with EU law. The chancellor [b]cannot[/b] get off his arse and introduce laws that set tax laws that prevent Starbucks moving money abroad in the way they have been - we, as a nation, have surrendered that right, we're bound by the EU charter.

Starbucks do have franchises. Some of the airports and Center Parcs outlets are franchises. I know this because the company I work for are involved in supplying services to them.

we, as a nation, have surrendered that right, we're bound by the EU charter.

Well, I suppose that depends whether you we mind companies taking their profits abroad and not paying tax here - of course one solution would be for European based countries to have their tax centrally collected direct into a central EU revenue collection service... 😉

I'm sure I read that the US Corporation tax is paid on turnover, not profit. That would seem to negate some of the money-shuffling exercises highlighted above?

I think it's paid on profit but there's a level it can't drop below which is calculated on turnover.

of course one solution would be for European based countries to have their tax centrally collected direct into a central EU revenue collection service..

[url= http://money.aol.co.uk/2012/12/04/starbucks-cuts-paid-lunch-breaks-and-sick-leave-is-this-fair/ ]http://money.aol.co.uk/2012/12/04/starbucks-cuts-paid-lunch-breaks-and-sick-leave-is-this-fair/[/url]

As one door closes, another one opens. 👿 I wonder how much of their increased tax bill this is hoped to offset?

BTW, has anyone looked at the tax arrangements of UK companies trading in the US?

Well Diageo's tax affairs are certainly worthy of note!

If I'm honest, it's not really the behaviour of Amazon, Starbucks & Google et al that surprising - it's the fact that the the UK public didn't realise that most multi-national companies structure their tax affairs in favour of shareholders that's most suprising ...