Share this page:
Stay connected:
Welcome to the Citywire Money Forums, where members share investment ideas and discuss everything to do with their money.

You'll need to log in or set up an account to start new discussions or reply to existing ones. See you inside!

Notification

Icon
Error

Starbucks
Jo Public
Posted: 14 November 2012 09:59:36(UTC)
#1

Joined: 16/01/2012(UTC)
Posts: 10

Thanks: 19 times
Was thanked: 1 time(s) in 1 post(s)
Anyone else feeling that Starbucks Executives added insult to injury in their protests and blogs (see their website) about their commitment to the UK?

Claiming that they pay tax here because they collect VAT & payroll deductions ... do they think we are really stupid or what?

And as for reducing "tax profit" (as opposed to investor profit - that's us chaps!) by paying royalties to themselves and through transfer pricing arrangements via Switzerland ...

Thanks to Reuters (or was it the Independent - hard to keep up these days), and helped along by some injudicious bleating from the culprits, we now know a great deal more about how these people operate. We all know why companies operate "buying operations" through Switzerland - and it ain't due to their outstanding port facilities!

British companies roast perfectly good 100% Arabica, Fair-Trade, Organic, Free-Range (blah blah blah) coffee beans. They sell them to fine local cafes and chains throughout the country, who also provide wifi, workspaces and whathaveyou. They are still not what I would call the "real" economy, but at least they are not out and out parasites.
P L
Posted: 14 November 2012 14:40:57(UTC)
#2

Joined: 10/08/2008(UTC)
Posts: 280

Thanks: 10 times
Was thanked: 242 time(s) in 109 post(s)
A company is run for the benefit of the owners, not the employees or Government or general public. Whilst it may make commercial sense to ensure one or all are kept happy to various degrees the primary responsibilty of those tasked with running it is to make the best sustainable return they can. If they utilise the prevailing legal / tax framework to the full to do so that is entirely up to them. If the framework is wrong then those tasked to maintain it have the responsibility to review and change it. Problem is they often make it worse.

If your football team were playing in the FA cup and were presented with an open goal you'd be annoyed if they deliberately missed because the opposing goalkeeper hadn't kept up with play and so decided arbitarily that it wasn't fair to score even though entirely within the rules.

At the moment the Governemnt are playing a dangerous game of on one hand wanting to be popular by being seen to be siding with the public mood and on the other knowing economic reality means money, investment and jobs can simply be moved elsewhere. Explaining to the public that we're dam lucky to get the left overs and the best approach is in either making the table bigger so more dinners can sit round it and stufff themselves and hence leave more or go on a diet is a difficult message to offer. Hence the theory that lower taxes bring in more revenue.

Yes if you don't like a particular product or producer for what ever reason don't buy from them. It's call a free market.

I take it that you engineer your finances to ensure you pay the maximum tax possible.
1 user thanked P L for this post.
Clive B on 14/11/2012(UTC)
Clive B
Posted: 14 November 2012 16:43:16(UTC)
#3

Joined: 25/11/2010(UTC)
Posts: 445

Thanks: 156 times
Was thanked: 98 time(s) in 62 post(s)
I agree with P L on this one.

The government and HMRC have defined the rules of the (let's pay tax) "game", appointed the referee and appeals panel, then complain that the "players" (some companies, some individuals) are beating them !
P L
Posted: 14 November 2012 20:02:33(UTC)
#4

Joined: 10/08/2008(UTC)
Posts: 280

Thanks: 10 times
Was thanked: 242 time(s) in 109 post(s)
To add to Clive's point ... they know full well that if they change the rules to rig the game in their favour suffiently it actually make the difference they really need no one will play ... at least not on our pitch.

Maybe the Governement would be better off suggesting/helping people buy the shares of these Companies instead. Then individuals will get to earn and spend the dividends on things they need/want rather than on what the Government decided to waste it on.

Tricky
Posted: 15 November 2012 11:06:53(UTC)
#5

Joined: 05/01/2012(UTC)
Posts: 7

Thanks: 3 times
Was thanked: 1 time(s) in 1 post(s)
Isn't there an argument to remove Corporation Tax altogether? After all, profit is used for reinvestment ( already largely tax deductible and also to be encouraged), or saving for tough trading conditions (income is taxed and also to be encouraged), or for distribution to shareholders - which should be taxed as normal income without the tax credit. Their argument is true, they have to pay a lot more for staff in the UK as we are taxed so heavily, so the Treasury gains from that alongside the VAT. Why should companies be taxed before distribution, when the distributions are taxed anyway? The only way to avoid this situation is to load the trading taxes like Vat for global companies and remove CT altogether, this would also have the benefit of hopefully giving the small independent traders a bit of a boost. Having been Financial Controller of a small group of companies it was a no brainer to charge back all the profits to the comany in the lowest tax regime.

Having said that I never buy Starbucks simply because it is such a rip off
Graham Barlow
Posted: 15 November 2012 14:43:50(UTC)
#6

Joined: 09/03/2009(UTC)
Posts: 193

Was thanked: 21 time(s) in 18 post(s)
Starbucks and Amazon etc are not the only International Companies avoiding Tax on UK generated profits. I have had cause to investigate a large Japanese multi National ,and I find a web of Euro companies each holding shares in UK operations in another jurisdiction. Management fees and other fancy cross charging to reduce the UK profit and Loss account is rife. Even Nissan which took Government (Taxpayers) money to build the UK factory ,appear not to own the Cars, they are owned by a Swiss Company Nissan UK only builds and gets a small profit on construction.. The real problem besides Tax is that they undermine many onshore companies paying the full rate of Tax by taking skilled staff at inflated prices, and can easily destroy local opposition.
1 user thanked Graham Barlow for this post.
Jo Public on 15/11/2012(UTC)
Graham Barlow
Posted: 15 November 2012 14:51:22(UTC)
#7

Joined: 09/03/2009(UTC)
Posts: 193

Was thanked: 21 time(s) in 18 post(s)
Another interesting area to look at Tax avoidance is the multi milllion pound takeovers of Household UK Firms like Boots and Cadburys etc. Most of the profit is paid away in interst on borrowings used for the takeover. Neat isnt it . Definitely our Politicians are completly devoid of business acumen and are asleep on the Job.
1 user thanked Graham Barlow for this post.
Jo Public on 15/11/2012(UTC)
Jo Public
Posted: 15 November 2012 17:26:46(UTC)
#8

Joined: 16/01/2012(UTC)
Posts: 10

Thanks: 19 times
Was thanked: 1 time(s) in 1 post(s)
Well thanks Graham, you seem to have understood what I was getting at. It is not so much the tax avoidance through transfer pricing etc. that annoyed me, as taking us for mugs by claiming to be so committed to the UK etc.

As you say the ultimate objective is to achieve monopoly by taking out the local competition, but in the meantime we, as consumers, still have choice. While this remains the case Starbucks have to think about their reputation.

A recent report suggested that the Starbucks brand had suffered in a way that Amazon, for example, has not. To me this is because Amazon has a far better monopoly of their market sector.

Anyway thanks for commenting chaps.

PS - sadly I am not in a position to engineer my own finances and have to leave it to HMRC, and yes, they manage to do so in such a way as to maximise the tax paid.
+ Reply to discussion

Markets

Other markets