Tax-row Starbucks pledges to open new shops

Kris Engskov, the company’s UK managing director, was reported to have demanded urgent talks at Downing Street after Prime Minister David Cameron took a thinly veiled swipe at the coffee giant.

In a speech at the World Economic Forum in Davos promising to lead global action against tax avoidance, Mr Cameron had said it was time for businesses to “wake up and smell the coffee” about public anger on the issue, in what was perceived as a jibe at the company.

Starbucks has been one of the highest profile targets of protests about “aggressive” tax avoidance after it emerged it paid no corporation tax in the last three years and only £8.6m in 14 years of trading in Britain.

While the firm has since changed its tax arrangements so it will pay about £10m in corporation tax this year, the revelations caused a customer boycott and political accusations of immoral behaviour.

Mr Engskov was reported to have used the meeting to threaten to put on hold a planned £100m investment in new UK branches of the coffee chain, which employs 9,000 staff in the UK.

A company source was quoted by the Sunday Telegraph as saying Mr Cameron was “singling the business out for cheap shots”.

Yesterday, in a statement, a spokesman said there had been a meeting on Friday, but that had been long arranged. It said the firm remains committed to its plans to open 300 new stores by 2016, and added: “We do not discuss the details of our Government meetings, but can say that we do not recognise how it has been reported.”

Asked at the time whether the Davos remarks were aimed at Starbucks, the Prime Minister’s official spokesman said the address “speaks for itself”.

Conservative Party chairman Grant Shapps told the Murnaghan programme on Sky News yesterday: “I don’t think we would ever single out a single company but I do think companies in this country need to pay their way.

“I think they need to do what’s right as far as that is concerned and I think most people watching this would agree, companies should pay their fair share of taxation.”