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That enough, folks? Starbucks tosses £5m into UK taxman's coffers

Beancounter's beancounters court Joe Public with voluntary payment

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Starbucks, one of the three firms - along with Amazon and Google - that have been hauled over the coals because of their teeny tax bills in Blighty, has handed over £5m to HMRC to please its customers.

The payment, the first the multinational firm has made in corporation tax in the UK for five years, said that it would make another payment of the same amount in the second half of this year, although it still insists that its business in the country is operating at a loss.

“We felt that our customers should not have to wait for us to become profitable before we started paying UK corporation tax," the company explained in a written statement.

"We listened to our customers in December and so decided to forgo certain deductions which would make us liable to pay £10m in corporation tax this year and a further £10m in 2014. We have now paid £5m and will pay the remaining £5m later this year.”

The voluntary juggling of the numbers has come after MPs in the Public Accounts Committee called firms to task for their tax planning, which has seen massive profits getting banked overseas and little or no tax paid in Britain.

Margaret Hodge, head of the committee, has said that while firms like Starbucks, Amazon and Google haven’t illegally evaded tax, they’ve behaved "immorally" by employing tactics designed to see their profits end up in countries and regions with low tax rates.

UK Prime Minister David Cameron has said that he wants to use the country’s presidency of the G8 to spearhead a crackdown on tax avoidance and encourage greater tax transparency from companies and countries.

Hodge said that it was great to see Starbucks paying some tax in the UK, but it wasn’t a great solution to the problem to have companies volunteering certain amounts to HMRC.

"We welcome this as a first step, but tax cannot be a voluntary contribution,” she pointed out. “The amount of corporation tax a company pays should be a fair and accurate reflection of the profits it is making in the countries where it does business.”

The tax row erupted last year after revelations of the low taxes paid by multinationals were too much for an austerity-hit Joe Public to take. In November, it emerged that Amazon had paid just £1.8m in corporation tax in the UK despite racking up a pre-tax profit of £74m on £3.35bn sales in 2011. Google filings showed the firm racked up £2.5bn of UK sales in 2011 but paid tax of just £3.4m and Starbucks paid £8.6m of tax over 13 years when it had sales of £3.1bn.

It remains to be seen whether Amazon and Google will follow suit and splash some voluntary tax cash in return for a little customer goodwill. ®

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