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Starbucks, and how to avoid the tax dodging businesses
Justin Aerial
Posts: 5,710 Forum Member
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It really annoys me when I read about businesses making money in the UK but not paying tax here, like Starbucks did. It`s a toss up which annoys me more, them or rich comedians trying to get out of paying tax....
So my question is, how do we get back at these people ? After all, even if some deluded souls make excuses for them, the fact remains that every pound they save is another pound we all have to pay.
First objective question, is there a website listing tax companies who go to extreme immoral (as far as I`m concerned) lengths to get out of paying UK tax. And, preferably, does the website have objective figures as to how much tax the listed companies actually pay as against what similar companies pay. As an example, in the case of Starbucks the BBC compared Costa Coffee`s turnover and the amount of corporation tax it paid with Starbucks.
Interesting, and surprising, sidelight, apparently Costa hasn`t seen any increase in trade (against Starbucks) since these corporation tax revelations. I shan`t use Starbucks if I can help it, but am I the only one....
So my question is, how do we get back at these people ? After all, even if some deluded souls make excuses for them, the fact remains that every pound they save is another pound we all have to pay.
First objective question, is there a website listing tax companies who go to extreme immoral (as far as I`m concerned) lengths to get out of paying UK tax. And, preferably, does the website have objective figures as to how much tax the listed companies actually pay as against what similar companies pay. As an example, in the case of Starbucks the BBC compared Costa Coffee`s turnover and the amount of corporation tax it paid with Starbucks.
Interesting, and surprising, sidelight, apparently Costa hasn`t seen any increase in trade (against Starbucks) since these corporation tax revelations. I shan`t use Starbucks if I can help it, but am I the only one....
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This deluded soul is going to suggest that where any company reduces their liability within the rules, which they don't write, then that tax was never due, and thus never lost by HMRC.
Simple.
You can also get much much much better coffee from independents and a proper cafeteria.
I don't think people are generally in the habit of doing back-of-the-envelope tax calculations and/or finding websites that list the amount of tax they did payand should have paid when they want some coffee, they just go and buy some coffee.
You also get a lot more coffee for less money too.
That's funny, I thought you paid tax on profits not turnover (having taken account of any losses brought forward to offset against any tax liability). Or has the law changed?
I'm guessing they rarely made a profit then...
I guess so but i haven't been in Starbucks in about 5 years so i don't know how much they charge.I pay 20 to 42p per mug.
I'm not sure that's all that meaningful a comparison, given that Costa is part of the much larger Whitbread group, whereas, practically speaking, all that Starbucks does in the UK is their coffee shops.
Incidentally, has anyone checked in what country Whitbread pay the tax on their overseas earnings? If we think it's a bad thing for companies not to pay tax locally then we can't have it both ways. (ETA Whitbread claim in that Guardian article that "we make losses overseas", which might be as convincing as Starbucks claiming that they only break even in the UK)
Well in order to pay that amount of tax they'd need to be either making massive losses in order to offset future profits, or hardly making a profit at all. If you're not making a profit off of however many billions of turnover then you're not a viable business.
Thats why they have accountants being payed millions of pounds to aviod paying anything..
When I used the term "deluded" I was referring to people who, for some reason, seem to think it`s almost laudable to avoid paying tax. They`re deluded because they`re mixing up two entirely separate arguments, i.e. how much tax we all pay v who pays it, and, specifically, those who get out of paying it either by employing (expensive) tax "experts", or, just as bad, paying tradesmen cash in hand. I can remember reading the comments left after the Daily Telegraph story on David Gauke`s comments, I was absolutely seething that these people could come out with such absolute bxxxxxxs and nobody seemed to be pointing it out to them. Not that they`d accept it anyway because, like car drivers when their bad driving is pointed out to them, they`re deluded.
As an interesting footnote, I`m not actually a Tory but sent Gauke a supportive E mail. I`ve yet to receive a response from him 7 weeks later, which doesn`t show him in a very good light I have to say.
On a broader point, if there are two companies offering pretty well the same service, but one`s paying corporation tax in this country and one is using some loophole to avoid it, thus meaning I personally have to pay more tax, I know where I want to spend my money. I`m just surprised everyone else doesn`t feel the same way.
You must be paying more tax for me then, because I structure my Ltd Company in order to avoid the higher tax brackets. My accountant isn't an expensive tax "expert", but he saves me between £8,000 and £10,000 annually against the equivalent PAYE.
You are if you're a multi-national. Internal divisions charge each other at different rates, so you make your profilts in countries with low tax rates, and your losses in the high tax ones.
For example, suppose X US supplied X UK and X Monaco with their raw materials. X US would charge X UK £5 a unit, and X Monaco £1 a unit.
Having added 50p expenses, both X UK and X Monaco sell the unit for £5.50. X UK breaks even - no tax; X Monaco makes a profit of £4 per unit, and pay a small amount of tax.
No doubt they do take advantage of any tax laws to minimise tax.
Starbucks didn't make any money in the UK. That's the whole point.
That is correct. Their sales are irrelevant.
It's not illegal to make only small profits though is it?
They must be making some profit - since they have paid some corporation tax.
Also - for a business to be viable - it only really needs to break even.
Even a company that does not pay corporation tax because it doesn't make a profit - will still contribute to the tax pot in other ways (VAT, NI, Employee PAYE etc)