Cable: Inland Revenue needs to take a close look at Starbucks

Nov 19, 2012

‘Best off in society have to contribute more – and that includes companies,’ says Business Secretary

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BUSINESS Secretary Vince Cable has urged authorities to clamp down on “completely unacceptable” corporate tax avoidance, but called for international cooperation over any reforms.
His comments follow the appearance of Google, Starbucks and Amazon executives before a committee of MPs last week to explain why their companies paid so little corporation tax amid growing pressure for reform.

Cable told the BBC’s Andrew Marr Show yesterday that there had been "appalling stories of abuse" of current corporation tax rules, adding: “The best off in society have got to contribute more, and that includes companies.”

But he said international cooperation was needed “to prevent companies simply moving to more tax-friendly countries”.

Starbucks maintains it has made a taxable profit only once in 15 years of operating in the UK. Cable said he didn’t know whether the company made a profit or not, but added: “You would need some pretty intensive investigation by the Inland Revenue to establish what exactly is going on, whether their transfer prices and royalties are being fiddled or not.”

The company is thought to have paid just £8.6m in corporation tax since 1999, despite last year alone seeing sales of £400m.

The Business Secretary acknowledged the frustration felt by the bosses of some leading British businesses, including Andy Street, the managing director of John Lewis, who last week warned that the chain could be driven out of business by companies like Amazon which pay so little in tax.

Cable’s comments came as another coffee chain was accused of tax avoidance in the UK. Caffe Nero, whose parent company is based in the Isle of Man for tax purposes, paid no corporation tax in Britain last year despite making a profit of nearly £40 million.

There is no suggestion that Caffe Nero is breaking the law. As The Daily Telegraph explains, it is simply “taking advantage of the rules in place in relation to capital allowances, deferred losses and interest payments”.

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