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MPs call for probe into Starbucks’ tax affairs while unions urge boycott

Starbucks – which has been telling investors its UK operation was profitable but informing British authorities it was lossmaking and thereby not liable for tax – could face a probe into how it could avoid paying tax on £1.2bn of sales since 2009.

MPs say the case undermines public trust in the British tax system and have called on HMRC to investigate Starbucks’ tax affairs – which was audited by Deloitte in both the UK and US.

In the US, Deloitte trousered $4.5m in audit fees and $199,000 in tax fees, while it earnt £87,500 for the 2011 UK audit and £53,550 for non-audit fees – which are believed to include tax advice.

The Starbucks row – which broke following a Reuters report – spurred Margaret Hodge, chair of the powerful Public Accounts Committee (PAC) to vow to raise a number of questions with HMRC chief Lin Homer who is due to testify to the PAC on a separate matter.

According to Reuters, Tory MP Steve Baker, has also called for an inquiry Starbucks, whose accounting practices are entirely legal.

Meanwhile, Labour MP Michael Meacher said he planned to table a motion in parliament asking the government to launch its own investigation into Starbucks, and potentially, other large companies which are paying minimal taxes on massive UK revenues.

The MPs said such investigations should end in a series of recommendations on how to change tax law to stop companies from shifting profits abroad.

Kris Engskov, Starbucks Coffee UK’s managing director said:

‘’Starbucks pays and will continue to pay our share of taxes in the UK to the letter of the law.’

More must be done to close loopholes enabling companies to avoid taxes, say unions.

The Northern Ireland Committee of the Irish Congress of Trade Unions and several MPs have called for a boycott of the cafe chain, a call echoed by some MPs.

ICTU assistant general secretary, Peter Bunting, told Reuters:

‘Support local cafes and bars, and send Starbucks and other tax dodgers a clear message - unless you contribute to society, this society has no cash for your coffee.’

Published 17 October 2012


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