Starbucks has handed over £5m to HMRC, its first corporation tax payment since 2008. However the money has only gone some way towards assuaging critics.
The coffee shop chain said on it had made the contribution to please its customers and would be paying a second £5m payment in the last half of the year despite claiming the business continued to make a financial loss in the UK overall.
In a written statement the company explained: “Six months ago, we felt that our customers should not have to wait for us to become profitable before we started paying UK corporation tax.
“We listened to our customers in December and so decided to forgo certain deductions which would make us liable to pay £10m in corporation tax this year and a further £10m in 2014. We have now paid £5m and will pay the remaining £5m later this year.”
A spokesperson for Starbucks declined to say how many customers it had lost following the high profile row which begun with protests outside some of the coffee shops by the campaign group, UK Uncut and ended with scorching criticism from parliament’s public accounts committee.
Margaret Hodge, MP and chair of the PAC, welcomed the first contribution by Starbucks but added: “Companies should not be able to pick and choose how much tax they pay. We need a system which ensures that everybody pays a fair share of tax on the profits they gain from the economic activity they undertake.”
The initial row followed revelations that Starbucks had paid £8.6m in corporation tax over 14 years of trading in Britain, and nothing since 2009 even after sales of £3.6 billion.
Campaigners claimed that a number of licensing and supply agreements with Swiss and Dutch arms of the Starbucks Empire were being used to allow it to shift profits from Britain to other countries.
UK outlets are able to buy their coffee from Switzerland at a 20 per cent premium and yet the foreign business is charged corporation tax there of 12 per cent compared with Britain’s level of 25 per cent.
Managing director of Starbucks UK, Kris Engskov, responded last December by promising to pay £20m within two years.
Accounts filed this week by Starbucks UK with Companies House will show the British side of the business still not formally profitable. Starbucks is likely to close up to 30 of its shops around the UK this year. A similar number were shut last year amid strong competition from Costa and other brands.
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