... ask MNers to boycott Starbucks?(806 Posts)
Personally, I won't be spending any money there again.
When I read the 'we pay our fair share of tax' statement, I almost choked on my (home made) hot chocolate. It's one law for the rich, another for us now is it?!
I think we should support small, UK-based independent coffee shops. Let's support businesses that generate wealth that is shared by local people.
BornToShop - Starbucks were specifically told that running water (no detergent) is the most environmentally friendly way to wash their crockery. They spent a fortune on that advice and then converting all of their shops. They don't leave the tap on because they're lazy, but because respected environmental consultants told them it was the greenest thing to do.
Already taken, rental income on uk property is taxed in the uk where ever the landlord is.
Of course there could be all sorts of skulduggery going on, but you could say that of any company.
(and thanks for all the v. Interesting, not patronising info cinnabar!)
I stopped going to Starbucks ever since I Heard that they used to leave the water tab running the whole day.
But then, unless they're investing on their own behalf, the pension funds and hedge funds etc. are managed by a third party (so not the "rich" person directly). You might have the occassional person placing direct orders through their broker, but pension funds themselves are largely collective investment schemes, and managed by an investment manager/asset manager, and are often set up by employers, or bought into on a retail basis. If the AM/IM see that they've invested in the stock of a company who is deliberately underpaying tax, and thereby might be liable for more tax/be fined/be subject of a public investigation and thereby be subject to expensive fines or lose value, they're less likely to invest in it.
Absy it's not that simple. The rich hold more of the pension companies and insurance funds for a start. But you need to add to that those who manage the pension funds and insurance companies. In this case many of them are probably in the US.
Cinnabar I've no idea who Starbucks landlords are either but are you sure it's not a holding company with some complicated arrangement to send most of its funds offshore? Could even be a company owned by Starbucks.
If Starbucks went out of business people would still want somewhere to go for a coffee, whether that was a large chain, who may be paying more or less tax, or a collection of small businesses.
The OP said "I think we should support small, UK-based independent coffee shops. Let's support businesses that generate wealth that is shared by local people." Could do worse.
Finally finished this thread. Thanks all for interesting info, particularly Cinnabar, who I don't find patronising at all.
I understand your points re accounting practices that Starbucks has used, and tend to agree that as well as being legal, this, for me, borders on the 'moral' side of the fence (assuming that they have attributed costs correctly that have been charged to their UK subsidiary).
However, I don't understand why Toombs thinks that people should not be able to distinguish between the two, and make a moral judgement and choose not to use a particular company if they judge that they fall on the wrong side of the 'moral' fence, if not the legal one. That's a personal choice surely?
For example, if I had a friend who I considered to act immorally, if not illegally, I might decide not to be friends with them. They're different things. So long as one didn't force someone else not to use Starbucks (or be friends with that person) then I don't understand the problem.
at EnglishGirl - you forgot a bit: "I'll boycott, I haven't read the thread but I don't like their coffee anyway"
<Joins Cinnabar fan club, waves Pom poms made of shredded Annual Reports>
I always find your posts very interesting, informative and clear, and not at all patronising!
I find it interesting that so many people a bit earlier have framed this as wealthy vs poor.
If Starbucks isn't paying all the taxes it should, the people who benefit are (presumably) the owners, but Starbucks is listed. And around 77% of its stock is held by institutional investors (so not necessarily wealthy inviduals, but things like pension funds, insurance companies etc.) so how IS this the UK government giving in to the wealthy? Stock report here Or am I being thick?
I don't find you patronising at all, I've enjoyed your posts on this and other threads (they stop my brain grinding to a halt on maternity leave!)
Maryz - I'd be willing to bet that someone soon comes along saying "I'll boycott, don't like their coffee anyway"
Now that is very interesting Cinnabar.
It'll be even more interesting to see how many of the boycotters bother to read it though .
And I don't think you have been patronising - I have found you informative (though maybe that makes me patronising too .
I'm really sorry that I've been patronising people. I've got to work on my writing style.
Apparently the reason why Starbucks keeps making operating losses (and hence tax ones) is because of its property costs.
Turned out that, several years back, Starbucks got into a 'coffee shop' war with Coffee Republic to secure the best sites.
Starbucks won, notionally at least. Coffee Republic went bust. But it hasn't made a profit since because it's paying so far over the odds for its rent. The only reason Starbucks hasn't gone bust too is because its US parent has pumped more than £240m of (not tax deductible) equity into it.
No idea who Starbucks' landlords are, but they'll be paying UK tax on their UK property income.
I've also done some digging into Pret a Manger. It's paying less than 4% tax on its UK profits because its private equity owner has stuffed the UK group with debt (the income side of which isn't taxable in the UK). When the private equity house exit from Pret the private equity partners will be taxed at less than 10%.
If you want to talk about inappropriate tax planning, boycott Pret....
Teapotqueen No they think they can sort out their expenses and increase sales to make a profit. If they didn't see the ability to make a profit they would be pulling out of the UK. If starbucks left the UK the country would be worse off as jobs for those who are unskilled are not easy to find.
illgetmycoat I don't think I am being patronising at all. There have been threads on here where I have read what others have had to say and learnt something from their knowledge. I am a responsible person and recognise that one must follow the law. If someone is following the law they have done nothing wrong and they must not be persecuted for behaving in the correct way. When it comes to a multinational company the tax rules can seem barmy at first glance. Starbucks doesn't have any accounting tricks such as SPV's to reduce their tax burden. The price paid for coffee to the sub based in Switzerland might seem high but Starbucks has been ethically sourcing their coffee beans and funding farmer support while their competitors don't.
I will also say that you should report that accounting firm to their society - ICAEW, ICAS or ACCA. As an accountant myself I would lose my license if I suggested to a client that they fiddle their expenses to reduce their taxes.
Already I don't think you could quantify that reduction in this short a space of time, and I think you would have to see measurable and sustained impact on sales, footfall, customer perception surveys etc.
sorry if the question has already been asked but - with so much bad publicity for Starbucks the value of the brand name to the UK business has clearly reduced. Therefore they should pay a smaller royalty to the US for its use and hence pay more tax in the UK -shouldn't they?
As if it were that simple. If I had a tape recorder, all I would have got after saying that we don't use our cars for business is "if you kept a diary and did use your cars that much, you'd save 3k".
The moral/legal decision was mine. I said no. i don't know that everyone would.
Illget yes I honestly believe that, on the whole, large accountancy firms do not wish to be party to fraud. You could report the firm in question, if you chose. Yes it is a fraud that you might have been able to get away with but it would have been a criminal act, I believe. Certainly beyond tax avoidance.
My point is that you wouldn't have known we were breaking the Law.
We could have matched milage to meetings and were told by a reputable firm of accountants that they would sign that off, as it would appear reasonable.
Do you honestly think that the larger accountancy firms don't drum up new trade by selling new angles to reduce tax?
Great post, Illgetmycoat.
I wish there were more people like you. The world would be a better place.
No, Illget, there is a difference. Yours would have "looked legitmate" but wouldn't have been. Starbucks returns are perfectly legitimate.
And yy to merrymouse - if Starbucks US didn't charge Starbucks UK for the use of the logo and for all the legitimate marketing expertise, advertising etc etc and pay tax on that income in the US they might be in trouble for tax avoidance in the US. We don't know.
Certainly their expenses to the US company are documented and justified in their accounts.
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