As small firms are hammered, guess what — the big boys are still getting away with murder
MILLIONS of self-employed workers who have been clobbered with a tax hike could be forgiven for wondering why the Chancellor doesn’t instead turn his attention to the retail giants engaged in large-scale, if perfectly legal, tax avoidance.
all retailers are supposed to pay corporation tax — a levy on company profits, currently at a rate of 20 per cent but falling to 19 per cent next month. But the tax produced less than 7 per cent of the total income going into the exchequer last year — just £45.6 billion — partly because some of the biggest names on the high street are not paying a penny.
here, we show how many of the major names in London’s oxford Circus are avoiding corporation tax.
CAFFE NERO UK SALES: £274 million PROFIT: £24.2 million loss CORPORATION TAX: Nil
It has more than 600 stores in Britain and Ireland. But Caffe Nero pays no corporation tax — claiming to have been making consistent losses in its UK business.
In the year to the end of May 2016, its parent company made an operating profit of more than £17million — but that evaporated into a £25 million loss after deducting loan interest payments to several UK banks. Loading up with debt is a common way to cut tax.
the coffee chain’s ultimate parent company is incorporated in the tax haven of Luxembourg. Its boss, private equity baron Gerry Ford, 59, holds controlling stakes through two firms based in the tax-friendly Isle of Man. Caffe Nero says it does not channel UK profits overseas. MAIL VERDICT: Needs to wake-up and smell the coffee.
VODAFONE UK SALES: £6.7 billion PROFIT: £486 million loss in the UK CORPORATION TAX: Nil
the global telecoms giant made a worldwide profit of £1.6billion last year. But in Britain, it has paid little or no corporation tax for years.
this is surprising considering it has 500 high street stores, more than 18 million customers and billions of pounds worth of UK sales.
It’s because Vodafone handed over exorbitant sums to the Blair government for 3G licences, and set aside those costs and other investments against its earnings here.
the firm has been dogged with criticism for years over its tax affairs. In 2010, it was accused of making a ‘sweetheart deal’ when it handed over £1.2billion to settle a row with HMRC over its Luxembourg arm. MAIL VERDICT: how absurd for a profitable Ftse 100 company to pay no UK corporation tax.
GAP UK SALES: £426 million PROFIT: £163 million loss CORPORATION TAX: Nil, in fact, it received £110,700 in credit
Not only does Gap pay no corporation tax, but its UK holding company received a credit from HMRC because it declared losses.
the clothing firm — which has been on our high streets since 1988 — has 115 stores employing up to 4,000 staff. But while the clothes are simple, its tax affairs are complex.
Gap’s main company here made a loss of nearly £20million last year after handing more than £12million of royalty payments to another offshoot — based in the UK and the Netherlands — which is also in the red and therefore paying nothing. MAIL VERDICT: Cosy set-up leaves a gap in this company’s tax affairs.
WATERSTONES UK SALES: £395 million PROFIT: £10.9 million CORPORATION TAX: Nil
DESPITE its 270 UK stores, 3,000 employees and nearly £400million worth of sales — Waterstones has posted large losses since the financial crisis in 2008.
the company is owned by Russian publishing billionaire alexander Mamut and its ultimate parent company is alpha trustees Ltd, registered in Nevis in the Caribbean.
It returned to a profit of £10.9million for the year to april 2016 — and managing director James Daunt says he’s delighted to be a corporation tax payer again.
he says: ‘I’ll be much happier when the cheque is bigger.’
MAIL VERDICT: the charming Mr Daunt correctly says firms should be pleased to pay up — but what a shame the company is owned through an offshore trust.
EE UK SALES: £6.3 billion PROFIT: £416 million CORPORATION TAX: Nil
the mobile phone seller runs 550 UK high street stores with more than 12,000 employees.
But even though it registered big sales and profits in 2015, it wasn’t liable for corporation tax because, like Vodafone, it has carried forward costs from the £8billion it invested in 3G back in 2000.
the days of the zero bill are over, though, as last year ee was taken over by Bt — the fourth highest corporate tax contributor in the country. MAIL VERDICT: at least Bt pays up.
TOPSHOP ARCADIA SALES: Not public PROFIT: £200 million CORPORATION TAX: £36 million
BELEAGUERED sir philip Green pays his fair share of UK corporation tax. But the business is owned by his wife, Lady Green, a resident of the tax haven Monaco.
she has extracted huge sums from arcadia out of reach of HMRC, including dividends of more than £300 million from Bhs between 2002 and 2004, plus £1.3 billion from arcadia in 2005. she also made more than £150 million from loans and property deals involving Bhs — all done though tax havens. MAIL VERDICT: What a shame HMRC can’t tax Lady Green.
BOOTS UK SALES: Not public PROFIT: Not public CORPORATION TAX: Not public
It Is a stalwart of the high street with more than 2,500 stores and
60,000 employees. But — incredibly — it’s impossible to tell how much tax Boots pays in the UK.
That’s because the quintessentially British business, founded in Nottingham in 1849, is now part of the gigantic U.S. firm Walgreens Boots Alliance.
For the past two years, its corporate headquarters has been in Deerfield, Illinois, so the firm is under no obligation to reveal how much tax it pays in the UK — or to disclose its sales or profits here. MAIL VERDICT: It’s bonkers that Boots can keep its corporation tax secret.
APPLE UK SALES: £1.12 billion PROFIT: £106 million CORPORATION TAX: £12. million
The U.S. giant’s two companies in the UK made more than £1 billion worth of sales. Yet they paid less than £13 million in corporation tax.
Apple is adamant it pays all the corporation tax due in the UK and, indeed, everywhere else in the world.
But some of its income has been channelled to its Irish operation, which enjoys a lower-tax regime — a practice which is at the centre of one of the biggest tax probes ever launched by the european Union.
After a three-year investigation, an EU task force found Apple had channelled profits from countries including the UK through Irish subsidiaries and, as a result, its earnings were not properly taxed.
The Silicon Valley giant was ordered to pay back £11billion of taxes to Ireland, though it is appealing. MAIL VERDICT: Considering how expensive Apple’s products are, the company can well afford to pay more.
MCDONALD’S UK SALES: £1.53 billion PROFIT: £270 million CORPORATION TAX: £56 million
UNTIL recently, the fast-food firm has been reducing its tax bills by channelling money to a company in luxembourg set up to receive franchise and royalty fees from outside the U.S.
In 2015, McDonald’s Restaurants ltd, the main British arm, shipped around a third of its profits, nearly £123 million, to luxembourg. More than £820million of franchise and royalty payments from its outlets here and in other countries has been sloshing into the Grand Duchy every year.
The luxembourg company made profits of £440million in 2015 but pays tax at only 0.7 per cent.
Just over a year ago, european officials launched an investigation into the fast-food firm’s tax affairs. The chain is now dismantling its luxembourg operation and setting up a new UK holding company which, it says, will receive all future royalties and fees, making its profits taxable here.
MAIL VERDICT: The UK missed out on millions.
VISION EXPRESS UK SALES: £255 million PROFIT: £7.3 million CORPORATION TAX: £282,000
YOU would need extra strong specs to spot Vision express’s minuscule tax payment for 2015.
It is the UK’s third largest optical retailer with almost 400 stores and huge profits — but it paid less than £300,000 in corporation tax.
Ceo Jonathan lawson said the bill would normally have been £1.4million, but ‘a new UK accounting standard’ resulted in a one-off reduction and an ‘unusually low charge’. he added that he expects the amount of corporation tax ‘to return to a more normal level in future periods’.
Although it was founded in Newcastle in 1988, Vision express is now a subsidiary of a large international eyewear chain, Netherlands-based GrandVision NV.
And tucked away in the notes to its accounts is the disclosure that its ultimate parent is an outfit in the tax haven of Bermuda. MAIL VERDICT: Read the small print.
STARBUCKS UK SALES: £406 million PROFIT: £34 million CORPORATION TAX: £8.1 million
The U.S. coffee chain has tried to clean up its act after being at the centre of a huge row in 2012, when it was pilloried for paying next to no corporation tax here.
It claimed it was making no profits in the UK due to expensive leases on some of its shops.
After a bruising encounter with MPs and signs of a consumer boycott, Starbucks made a voluntary contribution of £20 million. It also moved the european HQ from Amsterdam to london in 2014.
This means tens of millions of pounds of royalty payments that had been going to the Netherlands are now coming here.
Starbucks paid £10 million to HMRC in 2015, on top of just over £8 million in corporation tax.
happily, it is finally making profit after all these years. MAIL VERDICT: Did the right thing — eventually.
THOMAS COOK UK SALES: £2.3 billion PROFIT: £152 million CORPORATION TAX: £8 million
A TAX bill of £8 million may sound large, but it’s just over 5 per cent of the £152million operating profit travel agent Thomas Cook makes in the UK, where it has 719 high Street stores and 8,800 employees.
And as a percentage of the firm’s £2.3 billion sales in this country last year, that corporation tax bill is tiny.
The travel agent says it’s down to losses made in previous years. It went back into profit in 2015 after five years of red ink. MAIL VERDICT: let’s hope it stays in profit and pays more tax in future.