Caffe Nero pays no corporation tax again – after £25m profit

FURIOUS MPs last night accused Caffe Nero of gaming the system after it emerged the company did not pay a penny of corporation tax yet again last year.

Despite making a profit of £25.5million, the British-based firm avoided a £5.1million tax bill after claiming its holding company made a £24million loss.

Company filings revealed the coffee chain racked up £257.6million in sales in the year ending May 31, 2016, up almost 7 per cent on the year before. The firm, which has 613 shops in the UK and Ireland, has not paid UK corporation tax since 2007 despite generating more than £1billion in sales over that period.

In its accounts it boasted of its ‘strong growth prospects’ and said it plans to expand to at least 750 stores.

Its parent company Rome Pikco’s accounts claim the loss was down to ‘arm’s length interest payments to banks’.

‘Therefore no entity within the group was due to pay tax for the year,’ they said.

Caffe Nero gave the same excuse for paying no tax last year when it announced a £23.5million profit for 2015, but Rome Pikco claimed a £28.4million loss.

The firm has become a fixture on the high street since it started life in 1997.

But its reputation has been hit by revelations about its tax affairs and its complex corporate structure.

The head offices of Caffe Nero and Rome Pikco are based in Covent Garden in the heart of London. But Rome Pikco’s holding company, called Rome Holdco Sarl, is based in Luxembourg, a well-known tax haven.

The ultimate parent company – called Saratoga – is based in the Isle of Man, another tax haven. The architect of this arrangement is Caffe Nero’s Californian founder, Gerry Ford.

The 59-year-old, who lives in Kensington, West London, has previously insisted the structure ‘has no implications for our corporate tax at all’. This was given short shrift by MPs last night.

John Mann, a Labour MP and member of the Treasury committee, said: ‘Caffe Nero is taking business from decent people running cafes who are paying their tax properly. This is just ripping off the taxpayer. HMRC needs to gets it act together. It’s just a farce.’ Charlie Elphicke, a Tory member of the Public Accounts Committee which has been investigating tax avoidance, said: ‘It is unacceptable that large companies take money from British customers and do not contribute to the cost of public services.’

There is no suggestion that Caffe Nero has done anything illegal. A spokesman from Caffe Nero said: ‘Overall the group of companies that includes Caffe Nero did not make a taxable profit in the year to May 31, 2016. This is because of interest payments that it makes to third party UK-based banks.’

HMRC said it brought in a record £26billion in extra tax for public services in 2015, with £7.3billion coming from the 2,100 largest and most complex companies in the UK.

A spokesman said: ‘Large businesses must pay the tax that is due. Everyone must play by the same rules.’