Starbucks pays just £7m tax ... and blames Brexit!

STARBUCKS paid just £6.7million in corporation tax in the UK last year – and tried to blame Brexit for a fall in profits.

Although it recorded revenues of £380million in this country, the coffee giant’s profits tumbled by more than 60 per cent to £13.4million as fewer shoppers visited the chain.

It claimed customers were not as confident in spending their cash following the UK’s decision to leave the EU.

But consumer confidence has held up well since the Brexit vote – with household spending driving economic growth. Confidence has also been boosted by high employment, which is now at a record of 31.8million, official figures showed this week.

Brexit campaigner John Longworth, the former boss of the British Chambers of Commerce, said it was ‘nonsense’ to blame falling sales on Brexit, adding: ‘It beggars belief that companies that are underperforming thrash around and seek to find excuses in Brexit. The economy is growing and consumers are spending.’

Starbucks’s plunging profits meant the amount of corporation tax it owed in the UK last year was just £2.7million, with the overall bill bumped up by tax it owed for previous years.

Like other multi-national firms such as Google and Apple, Starbucks has been heavily criticised for how much tax it pays, and where. In 2012 it emerged that in the first 14 years after it arrived in the UK in 1998, the coffee firm paid just £8.6million of tax, despite sales of £3billion.

It was accused of using artificial corporate structures to shift profits out of the UK into lower tax jurisdictions.

But it has sought to clean up its act, and in 2012 it struck a deal with HMRC to pay £20million in voluntary corporation tax.

Globally it made around £17billion last year, of which £3.4billion was profit. But many of its 894 UK stores are not directly owned by Starbucks but by franchise partners – meaning the sales are not included in its accounts.

There is no suggestion Starbucks is not paying all the tax it owes in the UK. But tax accountant Richard Murphy said it was impossible to know if Starbucks was still avoiding tax within the confines of the law. Multinational firms can make use of tax havens and pay royalties to related companies in other countries.

Mr Murphy said: ‘What happens in its stores is not reflected in these accounts. Stores might be making payments to some other company entirely. There are all sorts of opportunities for Starbucks to be moving profits around in a way that wouldn’t be shown in these accounts.

‘That’s the real problem with the accounting laws. It’s time we had accounting laws brought into the 21st century – they are barely in the 20th century. Why should we be left in the dark about what’s really going on in our economy?’

Starbucks’s UK profits, as well as being hit by its franchise model, have also been eaten away after it announced all UK staff would be paid the Government’s new National Living Wage.

Martin Brok, president of Starbucks Europe, Middle East and Africa, said: ‘While there are undoubted challenges presented by a more cautious consumer environment, lower high street footfall, and adverse currency impacts, we are investing significantly to drive innovation.

‘The UK remains one of the most important EMEA markets for us.’