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Starbucks paid no tax in UK since 2009

Tuesday, October 16 15:24:00

Global coffee house chain, Starbucks, paid no tax in Britain since 2009 despite sales of Stg1.2 billion, it was revealed today.

Starbucks has been in the US since 1998 and accounts filed by the company since then show that despite £3bn in coffee sales, and opening 735 outlets, it paid just £8.6m in income taxes - a rate of 0.3 per cent overall.

In the past three years alone, Starbucks paid no tax whatsoever.

The fact that it did this perfectly legally has caused a flurry of condemnation of Britain's tax laws.

Its nearest UK rival, Costa, recorded £377m sales last year, compared to Starbucks's £398m in 2011, and its tax bill came to £15m, or 31 per cent of profits.

The Seattle-based firm is the latest US company to come under scrutiny for making a poor contribution to HM Revenue & Customs (HMRC) after Facebook and Google met similar criticism.

There has also been a growing backlash against those who have used legal tax avoidance schemes, including the comedian Jimmy Carr, who promoted a new Starbucks drinks in March this year.

Starbucks was able to legally pay such a low rate of tax by posting a loss in the UK, meaning it was therefore not liable for corporation tax, but was effectively paying money to other parts of the business, such as royalty payments for use of the brand, according to a four-month investigation by the news agency Reuters.

It compared the losses filed by the company's UK unit over the years, with conference calls made by the company's executives telling investors about how profitable the company was.

In the 2007 financial year to end-September, accounts filed by Starbucks's UK unit showed its tenth consecutive annual loss. But that November, Chief Operating Officer Martin Coles told analysts on the fourth-quarter earnings call that the UK unit's profits were funding Starbucks's expansion in other overseas markets.

The international coffee chain, which is the second-largest restaurant or cafe chain globally after McDonald's, says it has paid its "fair share of taxes" in full compliance with UK law and no authority had suggested otherwise.