Starbucks ‘used UK firm’ to cut tax bill

STARBUCKS funnelled cash through an obscure British company to avoid paying taxes in Europe, it emerged yesterday.

The coffee chain is now under investigation by the European Commission after allegedly using the ploy to hide millions from the Dutch authorities.

Reports claim the now-defunct UK business – called Alki LP – did not even have a single registered employee and has never filed proper accounts.

It is another twist in the continuing controversy over the tax affairs of the US giant, which ran its European businesses – including those in Britain – from the Netherlands.

It has already been called ‘immoral’ by MPs for using a labyrinthine tax structure that helped it avoid paying its fair share of dues in the UK.

Now details have surfaced of how Alki LP was set up as a holding business so the multinational firm could pay a meagre tax rate of less than 1 per cent in the Netherlands.

The UK company was registered to handle Starbucks’s ‘intellectual property’ – such as its brand and logo.

By paying hefty sums into it from its Dutch division, Starbucks was allegedly able to reduce its tax bill in Holland to just £1.9million – despite making profits of £300million.

A Wall Street Journal investigation has uncovered previously unknown details about Alki LP, including that it appeared to have no employees – and was registered at the offices of Starbucks’s tax lawyers Baker & McKenzie.

But because of the very limited details available, it is impossible to identify how much money the arm received – or whether it paid any tax in Britain. Accounts for Starbucks’ Dutch businesses show that they paid several million pounds a year into the division.

However, without access to full corporate documents it is impossible to tell whether this remained in the British firm or was funnelled straight into another tax haven.

Alki, which was closed down last year, has never filed proper accounts at Companies House.

When it was dissolved, it was folded into a new company, Starbucks EMEA Holdings – and this business has also yet to file any accounts either.

EU investigators believe this aspect could be key to a probe that is focusing on sweetheart deals between Starbucks and the Dutch government.

The company could face millions of pounds in back taxes if its financial arrangements are found to be illegal.

A Starbucks spokesman said: ‘We comply with all relevant tax rules, laws, and OECD guidelines and we continue to cooperate with the European Commission’s state aid investigation in the Netherlands.’

Between 1998 and 2012 Starbucks paid just £8.6million in corporation tax in Britain, despite racking up combined sales of more than £3billion.

After its tactics were exposed, the company offered to pay a voluntary £20million in tax.

Earlier this year the British boss of Starbucks Mark Fox provoked outrage after suggesting the company would not pay ‘normal’ levels of tax for years.

Weeks later the company reported its first ever UK profit of £1.1million – despite sales being a bumper £300million.

On this it paid taxes of just £232,363.

‘No registered

employees’