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Starbucks tax strategy in UK examined

Wednesday, October 17 15:50:22

Two British parliamentary committees are due to quiz tax officials about how Starbucks was able to avoid paying tax on 1.2 billion pounds of sales since 2009.

Lawmakers said a Reuters report that showed Starbucks had been telling investors its UK unit was highly profitable while telling British authorities the unit was lossmaking, and thereby not liable for tax, undermined public trust in the tax system.

Margaret Hodge, chair of the Public Accounts Committee and a member of parliament for the centre-left opposition Labour party, is among several lawmakers who said they wanted Her Majesty's Revenue and Customs (HMRC), the UK tax authority to launch a investigation into Starbucks' tax affairs.

Hodge said the head of HMRC and other officials would be testifying to the committee, which is tasked with ensuring value in government financial affairs, next month and that HMRC had "questions to answer" over about Starbucks's practices.

There was no evidence that Starbucks had been engaged in any kind of wrongdoing. It said it paid its tax in Britain to the letter of the law.

The Treasury Subcommittee, which oversees HMRC, is also due to question HMRC officials and its chairman, lawmaker George Mudie, said he planned to question them about Starbucks.

He said he also hoped the committee could hear from executives from the company, although he noted he would need broader committee support to call the company to testify.

Labour members of parliament John Mann, who sits on the subcommittee, said he would like it to hold an investigation focusing on Starbucks but Mudie said this was unlikely.

HMRC does not comment on individual taxpayers and rejected any challenge to its efficacy.

"We make sure that multinationals pay the right tax to the UK in accordance with UK tax law," it said in a statement.

Steve Baker, a member of parliament for the centre-right Conservative party that rules in coalition, also called for an inquiry.

"I am a highly free market person but what I want is simple transparent tax law that is actually obeyed ... there are some serious questions to answer here," he said. (C ) Reuters