Starbucks agrees to pay £10m to taxman

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Coffee giant Starbucks yesterday said it expects to pay “somewhere in the range of £10m” in UK corporation tax for each of the next two years.

The announcement comes after it emerged Starbucks paid just £8.6m in corporation tax in 14 years of trading in Britain and nothing in the last three years.

Starbucks UK managing director Kris Engskov told the London Chamber of Commerce that changes to its tax arrangements will see the firm pay above what is required by law.

Mr Engskov said the proposal had not been discussed with HM Revenue & Customs, adding: “With the backdrop of these difficult times, in the area of tax, our customers clearly expect us to do more.”

Activist group UK Uncut is planning protests at Starbucks cafes on Saturday in protest at the company’s tax arrangements as well as the impact of government spending cuts on women.

Starbucks, which has more than 700 outlets in the UK, made the announcement amid increased pressure on multinational corporations to pay a fairer share of tax.

The chain, along with Google and Amazon, was accused of “immorally” minimising UK tax bills in a damning report by spending watchdog the Public Accounts Committee. The committee criticised the companies for the “unconvincing and, in some cases, evasive” evidence they gave on why their corporation tax payments were so low.

Starbucks cut income tax by paying fees to other parts of its global business, such as royalty payments for use of the brand. This meant Starbucks UK was effectively making a loss and therefore did not have to pay any corporation tax. As a result, it has not broken any law.

The Seattle-based company vowed not to claim tax deductions for royalties or payments related to its intercompany charges in 2013 and 2014. Its nearest UK rival, Costa, recorded £377m sales last year, compared with Starbucks’ £398m, but its tax bill came to £15m.