... ask MNers to boycott Starbucks?

[legoballoon]

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.

You might not want Starbucks uk to include costs from head office in their tax comp. However the American tax authorities might take the view that this would be tax avoidance.

Illgetmycoat, from what you say, those accountants were suggesting you break the law. However I would be surprised if you decided not to include genuine business expenses in your tax comp so that you could pay more tax.

Maybe Starbucks have broken the law and this would be revealed by an investigation. However there is a lot of supposition but no evidence of law breaking in this report.

merrymouse We could have produced a very convincing, car usage diary and it would have looked absolutely legitimate, just like Starbucks and almost impossible to disprove. You would have been arguing in our favour on this forum.

No I wouldn't because you would be breaking the law.

The equivalent would be if Starbucks had somehow mislead or lied to HMRC during their recent investigation of their transfer pricing policies. Maybe they did, maybe they didn't. However, at this point, if evidence exists to show that this is the case, it has not been made public.

YY merry

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.

legitimate, ffs, I can spell, honestly!

Great post, Illgetmycoat.

I wish there were more people like you. The world would be a better place.

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?

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.

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.

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?

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.

not read all this bit i'll be boycotting

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.

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....

I'm really sorry that I've been patronising people. I've got to work on my writing style.

And yes, I'm a woman!

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 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"

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 always find your posts very interesting, informative and clear, and not at all patronising!

at EnglishGirl - you forgot a bit: "I'll boycott, I haven't read the thread but I don't like their coffee anyway"

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.