back to article Google, Amazon, Starbucks are 'immoral' and 'ridiculous' over UK tax

MPs didn't shrink from telling senior execs from Amazon, Starbucks and Google that they were "ridiculous", "unbelievable" and "immoral" about their UK taxes. Under questioning from the Public Accounts Committee, Andrew Cecil, the director of public policy for Amazon, tried to claim that he had no idea what sales were made in …

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  1. Destroy All Monsters Silver badge
    FAIL

    I stopped reading at the point where government flacks are calling someone else "immoral".

    1. Shagbag

      Totally agree.

      After the expenses scandal, it's repulsive for an MP to even feel they're in a position to judge the morality of another.

      1. Anonymous Coward
        Anonymous Coward

        Re: Totally agree.

        So what do you expect them to do - just ignore it?

        1. Ramazan
          Pint

          Re: what do you expect them to do

          lower the taxes. They should compete for customer by free market rules

          1. JeevesMkII
            FAIL

            Re: what do you expect them to do

            Really? That's your advice? Just lower taxes? Taken universally, that just means a race to the bottom Britain can't win. There's always going to be an island nation that'll be happy with a few thousand for a business license and no income tax at all.

            Companies who want to do business here need to pay what they owe, and not export their profits overseas. To do otherwise is simple theft, and ought to be prosecuted as such.

            1. Graham Dawson

              Re: what do you expect them to do

              Pay what they owe? Who says they "owe" anything? Governments are not gods, they have no more right to another entity's money than any other random collection of bureaucrats. Taxes are an imposition extracted through the state's monopoly on the use of force, they are not a moral imperative, and avoiding them is not an immoral act.

              But putting that aside for the moment, if you want to stop corporations avoiding taxes, then the solution is not to lambast them for "immorality", but instead to move the taxes to where they can't be avoided. Get rid of corporation taxes and all those other things and tax sales instead. It's virtually impossible to evade or avoid sales tax, and it's much easier to resolve if they try.

              1. DanDanDan

                Re: what do you expect them to do

                You can't tax sales, that's ridiculous. You tax profits. Which is what we're trying to do. But the issue is people are lying about their profits with loopholes. So we need to close the loopholes.

                1. Magister

                  Re: what do you expect them to do

                  "You can't tax sales, that's ridiculous"

                  VAT - no matter what you call it, it is a tax on sales. (Admittedly, one that the customer pays). Note that each of the companies will have paid VAT which is (probably) not included in the figures given to the MPs.

                  There is a manual published each year in the UK that provides information on the tax laws. This book has more than doubled in size over the past decade; because the number of laws relating to tax has increased. They try to close one loophole off; and before the legistlation has even passed, people are working out how they can use the new laws to avoid paying tax.

                  Essentially, instead of passing new laws, they need to go back through the existing legislation to remove the stuff that creates the loopholes in the first place; but as that is actually much harder, they just make new laws that exacerbate the problem.

                2. Anonymous Coward
                  Go

                  Re: what do you expect them to do@DanDanDan

                  "You can't tax sales, that's ridiculous"

                  Of course you can. Petrol, fags, booze have punitive sales taxes added, and most items are subject to VAT; property has stamp duty charged. In the case of VAT these costs are mostly reclaimable by all except the retail customer, but the other taxes usually aren't. Arguably personal income tax is simply a sales tax on the sale of your labour to an employer.

                  A sales tax where avoidance of corporation taxes is clear is a damn good idea, and could even be simplified by tweaking the rules on VAT to make it reclaimable except in those circumstances. Somebody will now say "you can't do that because" but there's already situations where companies can't reclaim VAT, usually of a fairly technical nature (for example certain retail loan administration costs).

                  What is lacking here is (as usual) the political will to take a problem, and fix it. Grandstanding on a palrliamentary committee is a nice bit of fun, but this shower aren't accountable for anything, and I can't see that flea-brain Osborne fixing this ever.

                3. Graham Dawson

                  Re: what do you expect them to do

                  The quickest way to tax profit is to tax where that profit comes from: sales.

                  I'm no randian. I simply start from the position that government is a necessary evil that we should have as little of as possible and work from there. Rand argued that government was unnecessary. Very different position.

                  1. Anonymous Coward
                    Anonymous Coward

                    Re: what do you expect them to do

                    Your way of having less government is to tax sales? It's genius, you for governor of the Bank of England.

                    Oh, hang on, that's nonsense.

                  2. James Micallef Silver badge

                    Re: what do you expect them to do

                    "The quickest way to tax profit is to tax where that profit comes from: sales"

                    Currently sales tax (VAT) is paid by the consumer... the corporation can claim back the part that it's expenses are on, so that won't solve anything. The way to do that is to start taxing corporations on revenue not on profits. (although that would open a whole other can of worms)

                4. Nuke
                  Holmes

                  @DanDanDan - Re: what do you expect them to do

                  Wrote :- "You can't tax sales, that's ridiculous."

                  So what is VAT? And before that there was an explicit "Sales Tax".

              2. JeevesMkII
                Alert

                Re: what do you expect them to do

                "Taxes are an imposition extracted through the state's monopoly on the use of force,"

                Oh god, the Randroids have arrived. Abandon thread.

                1. Yet Another Anonymous coward Silver badge

                  Re: what do you expect them to do

                  The obvious thing to do with a giant loss making industry that is as vital to the UK as Starbucks - is nationalise it.

                  A fair price would be paid to it's shareholders based on the profits they have been making!

              3. John Wilson
                Flame

                Re: what do you expect them to do

                Taken in order:

                1) Taxes are a requirement for the running of a country that is not in a state of anarchy, it is simply a question of who pays, and how much. That the requirement of paying taxes sometimes requires the force of the state (usually via the courts) is simply to ensure that everyone who owes tax, pays it. Incidentally, those courts also require people and corporations to pay taxes in order to function.

                2) Avoiding tax doesn't mean tax ultimately does not get collected, it just means that the distribution of taxation shifts. Avoiding several billions of pounds collectively in corporation tax ultimately means the less well-off pay more tax relative to their income, meaning they have less money; avoiding tax can therefore quite easily be described as an immoral act.

                3) Your solution to "stop tax avoidance" appears to be "don't charge tax". This is stupid, please don't do the stupid.

                4) We have sales tax, it's called Value Added Tax. Again, please don't do the stupid.

              4. James Micallef Silver badge
                Mushroom

                Re: what do you expect them to do

                "Taxes are an imposition extracted through the state's monopoly on the use of force"

                Taxes are also the basis of building a whole infrastructure and rule of law that alllow a large chunk of UK residents to be able to pay £5 for a coffee should they choose to do so. Blatantly taking advantage of that is 'not cricket'.

                Having said that, it's not ILLEGAL, only IMMORAL, and if the collective MPs are so outraged at the low level of tax that corporations are legally allowed to pay, maybe they should be pissed at the people who actually made the laws and voted for them.... Oh wait, that's teh MPs themselves! Ah well, maybe next time they shouldn't accept all the wining-and-dining and campaign contributions they receive in return for making the tax law so advantageous to their lobbyists. Maybe they can show more moral fibre in their day-to-day behind-the-scenes dealings than in their public-facing look-at-me-I'm-such-a-paladin-of-the-people personas.

            2. Armando 123

              Re: what do you expect them to do

              @JeevesMkII: " that just means a race to the bottom Britain can't win. "

              And why is that? Because taxes are too high because the government is doing too much?

              Funny thing going on here in the US: the states have different taxes in different ways in different amounts. The result is that a state with a lot of government spending (say, Illinois) tends to have higher taxes and then loses jobs to states with lower spending/taxes. Remember in 2011 when the Chicago Board of Trade was considering moving to Indianapolis? ( http://blogs.courier-journal.com/politics/2011/06/16/the-indianapolis-er-chicago-board-of-trade/ for a reference to it ). Nothing came of it, but that this story had legs for a couple weeks says a LOT.

          2. DanDanDan

            Re: what do you expect them to do

            "Compete for customers" should be done by deciding how much you're willing to pay for those customers. If they want customers in the bahamas, then they can pay 5% for them, if they want UK customers, they should pay UK taxes. They shouldn't pay Bahamas prices for UK customers, it's like paying Lada prices for a Jaguar.

            We do decide what our tax rates are based on market competition, but when we're being stolen from it's not because the price is too high, it's because it's perfectly legal. We need to make it illegal to steal from us, not drop our prices.

          3. Psyx
            FAIL

            Re: what do you expect them to do

            "lower the taxes. They should compete for customer by free market rules"

            That's fine and will work... if you don't mind lowering your standard of living to that of the lowest competing country in a 'how much can we do without' economic war.

            We drop our tax, and then other nations drop theirs, and we're back to square one. Dropping taxes only favours the shareholders.

          4. cs94njw
            Holmes

            Re: what do you expect them to do

            The same way that Ireland lowered taxes, and then ended up having a screwed economy?

        2. Anonymous Coward
          Unhappy

          Re: Totally agree.

          "So what do you expect them to do - just ignore it?"

          No, what I expect them to do is copy the practice, and that's exactly what Margaret Hodge's family company Stemcor does. UK revenues of £2.1bn, and paid taxes equating to 0.01% of those revenues. Good socialist values Margaret! Not that the rest of the Westminster leeches of any political persuasion are any better.

          Remember, fellow commentards, having the one job and paying your fair share of tax applies to us, not them.

          http://www.telegraph.co.uk/finance/businesslatestnews/9668396/Margaret-Hodges-family-company-pays-just-0.01pc-tax-on-2.1bn-of-business-generated-in-the-UK.html

      2. DanDanDan

        Re: Totally agree.

        Let's start an independent enquiry into.... oh wait, let's not. Let's let MPs do what we elect them for. Independent enquiries really are costing us far too much!

      3. Anonymous Coward
        Anonymous Coward

        Re: Totally agree.

        It wasn't all MPs who were on the fiddle, please don't make out like it was.

        1. Naughtyhorse
          Unhappy

          Re: Totally agree.

          thats correct, but it was most of them.

    2. ForthIsNotDead
      Stop

      Me too!

      I nearly choked!

      "We're not accusing you of being illegal, we're accusing you of being immoral," Hodge retorted.

      Clearly the irony went over his head.

      Hello pot! Meet kettle!

      1. Anonymous Coward
        Anonymous Coward

        Re: Me too!

        ""We're not accusing you of being illegal, we're accusing you of being immoral," Hodge retorted.

        Clearly the irony went over his head"

        Well, for a start, Hodge is a woman.

        Secondly, how is she immoral? Or do you mean "all mps are immoral" because you say so?

        1. Naughtyhorse
          FAIL

          good point

          Of course all mp's are moral,

          exept the selfe serving media whores on gameshows right now,

          or the ones too sick<sic> to attend their own fraud trials,

          and of course the ones already convicted of fraud,

          and the ones who stole from us and grudgingly gave it back when caught

          (have to try that at a bank sometime, rob it, and offer to pay it back if im caught.)

          and not forgetting the ones responsible for the uk becoming embroiled in torture and mass murder

          and geoffery archer

          that list barely covers 650 or os, so that leaves....

          oh!

          and the head that irony went over, i dont think it was hodge's

          <is that the sound of another whoosh as something passes over someones head>

          1. Anonymous Coward
            Anonymous Coward

            Re: good point

            @Naughtyhorse,

            So again, simple question was asked, and not answered, how is Hodge immoral?

    3. Naughtyhorse

      true, true

      but the amount of money involved is altogether more serious

    4. Peter Ford

      Set a thief to catch a thief

      obviously...

  2. Tom 15

    Bleurgh

    Can we stop talking about the amount of corporation tax paid on sales turnover? The two have no relation...

    1. mccp

      Re: Bleurgh

      I think that you have missed the point.

      These companies claim that their profit on billions of pounds of sales turnover is non-existent. If that were true there would be no problem. However, it appears that they use slippery accounting procedures to export the profits that they do make to tax havens. Because they hide their real profit margin, the only way to comment on this or for El Reg to report on it, is to look at the tax paid as a proportion gross revenue.

      If you generously assumed that Starbuck's EBIT was 15% of gross revenue, then they would need to be paying more like £90M in tax on revenues of £3.1B.

      1. Anonymous Coward
        Anonymous Coward

        Re: Bleurgh

        They have all their IP and branding registered in a tax haven and every store leases the IP from the other division. The coffee and supplies are artificially inflated in price and therefore the stores make no money.

        Welcome to Hollywood accounting business style.

        Who still thinks globalisation is a good thing? we'll end up moving to a model where there is a sales tax (on top of VAT), only the companies won't pay that, you will!

        1. David Webb

          Re: Bleurgh

          From what I gather, they report their profits in low tax areas so they pay low tax on the profits, they report their losses in high tax areas so reducing their tax burden in those areas to zilch. The tax code should really be simplified so that companies can't shift their profits out and bring their losses in, then they would have to start paying the appropriate amount of tax, or find another loophole.

          As they point out, the UK is pretty profitable so they won't up and leave and if they threaten to up and leave, that's fine, Costa Coffee pays their taxes..........

        2. browntomatoes

          Re: Bleurgh

          Quote: "we'll end up moving to a model where there is a sales tax (on top of VAT), only the companies won't pay that, you will!"

          And who do you think pays gives companies the money to pay corporation tax? They just raise their selling price to cover that the same as any other cost of doing business.

          1. chr0m4t1c

            Re: Bleurgh

            Because the company makes money and then pays money on the profit with corporation tax.

            Look, it's perfectly straightforward.

            Current system:

            Cost of delivering item to customer: 50p

            Markup: 50p

            Selling price to customer: £1.20 (50p+50P + 20p VAT @ 20%)

            Corporation tax: 10p (let's say 10% to keep the calculations simple)

            Under current system, company gets 40p (markup minus corporation tax) and gubmint gets 30p (VAT plus corporation tax).

            Proposed system with 0% corporation tax and 10% sales tax (to replace corporation tax):

            Cost of delivering item to customer: 50p

            Markup: 50p

            Selling price to customer: £1.30 (50p+50P + 20p VAT @ 20% + 10p sales tax @ 10%)

            Corporation tax: 0p

            Company gets 50p, gubmint gets 40p and you just paid an extra 10p. What a great idea.

            Yes, they could opt to reduce their profit to keep the final price down, but do you believe for one single second that they would?

            1. Anonymous Coward
              Anonymous Coward

              Re: Bleurgh@chr0m4t1c

              "Yes, they could opt to reduce their profit to keep the final price down, but do you believe for one single second that they would?"

              Well as not all businesses are playing the same tax dodging game. So Starbucks would become more expensive than Costa; Amazon would lose some, maybe all their price edge. In some cases John Lewis would be cheaper than Amazon with a 10% uplift.

              So it becomes the tax-dodger's call, and then the choice of their customers. If you love Starbucks, and want to pay the UK tax that they ought to pay, then you'd be free to do so.

            2. hollymcr

              Re: Bleurgh

              @chr0m4t1c

              You have a few errors in your maths. Corporation tax is paid on profits, so in your first example the "profit" is only 50p therefore tax is 5p. But the rest is ok, leaving the company with 45p. However, the problem is that if you are Starbucks, the cost of delivering a £1 coffee is, allegedly, £1, so the corporation tax is zero. The question is how to force Starbucks to pay that 5p.

              A sales tax of just 5% is enough to collect that 5p. As to where it comes from: Now that as part of the same tax changes corporation tax got reduced to zero, Starbucks magically discover that they can sell a £1 coffee for costs of 50p after all, so they have plenty of margin to pay the 5p. If they decide to increase prices instead they can, but they won't be competitive against Costa, who are also paying 5p sales tax but didn't increase their prices because they also saved the 5p corporation tax they were paying. Because let's face it, if Starbucks can put 5p on the price of a coffee and still sell them then they're going to do that, regardless of a change in tax.

              The interesting thing is that now it makes sense to bring all EU sales though the UK because our sales tax only affects UK sales and our corporation tax is now zero. Whether that's a good or bad thing is another matter.

              The problem with all of this is more subtle. A company that makes £1m on sales of £10m currently pays the same corporation tax as a company that makes £1m on £100m, but with a flat sales tax one will pay 10x what the other pays. The latter company is only making 1% so could not swallow a 5% sales tax without increasing prices. This would mean we'd need different rates of sales tax on different items to maintain the status-quo.

      2. Naughtyhorse

        Re: Bleurgh

        fuck generosity! lets assume its 99% and backdate the bill 3 years.

  3. JamieL
    Unhappy

    So where do they do their litgation?

    If these companies claim their business is outside the UK then whenever they need the services of our courts (IP litigation etc) then perhaps they can take that to Bermuda and see how they get on...

  4. Alex Walsh

    I'm not a fan of this sort of tax avoidance but it's only part of the picture and it leads me to suspect some element of political show boating from PAC.

    If you look at the HMRC Calculating the tax gap briefing from October, you'll see that HMRC reckon some £32bn in tax income went walkabout during 2010-2011 via avoidance or evasion. It further says half of this, £16bn, was due to SME's (small and medium sized entities- you're normal, non-multinational giants). Why not go after them with the same sort of publicity?

    Oh that's right, Reuters didn't do a report on them.

    Sorting out the taxation of these multinationals is going to be a legislative nightmare that is going to take years to get right. Whilst this is a step in the right direction, I fear that the gov won't see it through to the bitter end.

    1. Alex Walsh

      Sorry, your, not you're. :(

      1. Anonymous Coward
        Anonymous Coward

        If nothing else

        the profits of the SMEs are mostly staying in the UK where the interest is taxed.

        The main point here is that if you do business in the UK then you have to contribute in taxes, the same for everyone.

        Legislation may be needed but it isn't that big a deal.

    2. Shagbag

      It's Political Grandstanding, that's all

      The fact is: successive Governments from either side of the House have failed to stop Tax Avoidance. It's been going on since the Middle Ages and it will continue to go on. The fact that this Government and the previous Labour Government have totally failed to stop it say it all. MPs are wasting their time 'grandstanding' in PACs and should be in the House passing legislation.

      Full props to Troy Alstead (CFO of Starbucks) who told the MPs to, effectively, 'fuck off, it's none of your business' when asked about Starbucks' Dutch operations. He knows: 'there's nothing you can do because what we've done is perfectly legal - that's why it's called Tax Avoidance and not Tax Evasion. Try and stop us - you can't. Decades of successive Governments have all tried and failed. Yours is no different.'

      1. John Colman
        Happy

        Re: It's Political Grandstanding, that's all

        You're right, it is grandstanding. It is a selfish attempt to show that the government is being tough on this issue.

        But it is also the government trying to be tough on this issue. By calling in the big firms and identifying their practices, the MPs can then start to close the loopholes starting with the biggest ones through proper legislation.

        Also, by slamming the big firms first, it sends a message to people lower down the chain that this is wrong, the government will be fixing it and you should start playing ball before you get caught out.

        Finally, the court of public opinion plays a big role in our producing our legislation.

        So far, Google are the only ones who get the message. Their practices are still shady, but at least they are honest about them and willing to work with the UK government. Amazon and Starbucks are digging their own grave.

        <===== Seriously El Reg, no icon for a sensible debate?

        1. Real Ale is Best
          Boffin

          Re: It's Political Grandstanding, that's all

          Yes, I was impressed (a little) that Google did come straight out and say that they were trying to avoid Tax. A point that rather rubbed Amazon and Starbucks' noses in it.

          It will be interesting to see if 'Do No Evil' extends to 'Pay a fair amount of tax in the countries you do business in'.

          Also wanting an intelligent debate icon.

          1. Anonymous Coward
            Anonymous Coward

            Re: It's Political Grandstanding, that's all

            Yeah, I wish the firms had come straight out and said "well, we don't make the rules.. We try to pay as little tax as is leagally possible, and, if you don't like it then change your rules, but don't pretend you don't know what's going on".

          2. Smallbrainfield

            Re: It's Political Grandstanding, that's all

            I think Google have started to use this as a bit of a tactic when they get caught doing something shady. They tend to own up and agree to work with the other parties involved to sort the issue. Makes them look like honest Joes.

            1. ravenviz

              Re: It's Political Grandstanding, that's all

              @Smallbrainfield

              look like honest Joes

              Yes, but being honest Joes in the first place might also be nice.

            2. Anonymous Coward
              Anonymous Coward

              Re: It's Political Grandstanding, that's all

              Its more 'honest' than what a many corporations do.

              At least they have been honest in so far as their motives and their postion when questioned.

              They might not be living up to their company motto but they are at least being honest about it

        2. frank ly

          @John Colman Re: It's Political Grandstanding, that's all

          "By calling in the big firms and identifying their practices, the MPs can then start to close the loopholes starting with the biggest ones through proper legislation."

          I fully agree with your sentiments John but I'd say the following:

          These MPs are there for the opportunity to look good and tough and hard talking. You don't identify the practices of these firms by modern gladiatorial interrogation in a public arena, (that's just to impress the party bigwigs and the people who might vote for them at the next election.

          Any accountant worthy of the job title can figure out exactly how these companies perform their accountancy tricks. Hint: they use opportunities provided by the tax legislation and the standard accountancy practices.

          The legislation and accepted practices have been set in place, and in legislation, by Parliament which is the group of all MPs. The legislation and resulting 'loopholes' were deliberately constructed to be of great benefit to those 'traditional' companies who gave lots of money to political parties and gave directorships to MPs and senior civil servants. I'm thinking banks, large accountancy firms, etc.

          Nowadays, there are many new rich companies who are using these loopholes but don't form part of the traditional pig trough for MPs and senior civil servants. That is why the politicians are annoyed.

      2. Anonymous Coward
        Anonymous Coward

        Re: should be in the House passing legislation

        They should be debating legislation - if they're just passing it they're not doing their jobs properly.

        1. Lars Silver badge

          Re: should be in the House passing legislation

          And you should stop using Starbucks, problem solved.

      3. EddieD

        Re: It's Political Grandstanding, that's all

        "Full props to Troy Alstead (CFO of Starbucks) who told the MPs to, effectively, 'fuck off, it's none of your business' when asked about Starbucks' Dutch operations"

        I thought that under EU finance laws hidden sweetheart deals were illegal because they distorted the alleged free market across the EU - how can one country compete against another if it doesn't know what it's competing with?

    3. Psyx
      Go

      "It further says half of this, £16bn, was due to SME's (small and medium sized entities- you're normal, non-multinational giants). Why not go after them with the same sort of publicity?"

      Because it makes more sense to chase a smaller number of companies for a larger chunk of the pie.

      Here's the classically most effective way to deal with tax evasion:

      http://en.wikipedia.org/wiki/Pareto_principle

    4. Jess--

      HMRC are probably sensible enough to work out that that it's easier to concentrate their efforts on 3 / 4 big companies than it is to try and go after 1000's of smaller companies when the amounts of money involved are equal.

      put it another way...

      if you have 2 people that owe you £500 each and another 1000 people that owe you £1 each which ones are you going to chase first for the cash?

  5. Pete 2

    First rule of internet forums

    (well, it's not but it should be)

    Whoever resorts to name-calling has lost the argument.

    So for MPs to go around insulting these companies demonstrates in no uncertain terms that they have no logical, legal or contractual position that would stand up. I can forgive a 5 y/o relative who's argument against eating cauliflower was "because it's stinky!" but to hear the same argument, with the same tone, though different words being used by our lawmakers is, well, ridiculous.

    1. Anonymous Coward
      Anonymous Coward

      Re: First rule of internet forums

      Pretty harsh downvotes! Listening to clips of the investigation last night, I got the same impression.

      The tone was awful. It didn't sound professional at all - more like a bitter head geography giving sarcastic, superiority complex, "this is my chance to make up for the years of bullying as a child" venom to some kids he caught smoking.

      1. Pete 2

        Re: First rule of internet forums

        > Pretty harsh downvotes!

        I guess there's a lot of people out there who don't like cauliflower, either.

      2. Anonymous Coward
        Anonymous Coward

        Re: First rule of internet forums

        that's funny, I heard it and thought that the execs got exactly what they deserved form the committee. If you're going to be evasive and downright lie to the committee, especially when they know you're doing it, you should expect to be taken down a peg or two.

        1. John Brown (no body) Silver badge
          Mushroom

          Re: First rule of internet forums

          If you're going to be evasive and downright lie to the committee,"

          My thoughts too, WTF is sending the "Director of Public Policy" to an investigation into tax and financial matters saying to you? Sound like big "fuck you" to the committee and no attempt to even try to "play nice".

  6. This post has been deleted by its author

  7. Anonymous Coward
    FAIL

    If there is no suggestion that these companies are breaking the law, then why the big fuss?

    Unless it's to hide the complete and utter incompetence of both HMRC and a sucession of Chancellors who have allowed these loop holes to be exploited (legally) by these multi-nationals?

    If anyone should be up before the Public Accounts Committe, it is the current (and indeed past) Chancellor of the Exchequer and the head of HMRC. This is a bit like blaming the fox for raiding the hen house when the farmer left the doors wide open.

    1. Anonymous Coward
      Anonymous Coward

      They had the head of HMRC in last week. They confused her by asking:

      Questions she couldn't answer (What do you make of KPMG promoting a 5% tax rate? [Which MPs wrote & voted in; not Homer's place to comment])

      Questions she couldn't understand (This CT tax take percentage, it goes from 18% in 2005 to 14% in 2012 - isn't that evidence that you're failing to tackle CT avoidance? [No. Hodge misread the tables; the figures she was looking at were percentage of tax gap attributable to CT falling 4%, which most people would consider an improvement..? Small wonder Homer floundered a bit on that one until someone from the NAO worked out which figures Hodge was relying on and pointed out they proved the opposite of what Hodge wanted to demonstrate])

      Questions HMRC had already answered (Have you litigated a single big company since 2004? It's a matter of public record you know, I can check? [Yes, it is a matter of public record. HMRC's supplementary written evidence to the PAC hearing of 27 June 2012 to be precise, when the Committee last asked HMRC how many cases they had pursued])

      They need to ask better questions, but as long as clerk prepares them poorly, we won't get any facts, just the grandstanding. Frankly, I'd rather they spent the money on HMRC than MPs but there you go.

      1. Anonymous Coward
        Anonymous Coward

        A little update to my post of 13 Nov at 12:42 - putting 2 + 2 together from a recent 'exclusive scoop' from Private Eye, I suspect the MPs were supposed to be asking about HMRC litigating on Transfer Pricing issues, rather than just 'big companies' . This explains why the point came up in the companies' hearing, again mis-regurgitated from the briefing and hence missing the point & making the questioner look silly. There's probably all sorts of reasons HMRC could give for not spending funds/resource on taking TP disputes before the tax tribunals, and how much you believe them is probably proportional to how much exposure you've had to working actual TP cases. But either way, _that_ might have been a useful question to have asked; I really struggle to understand the value of a public hearing where the inquisitors' understanding of the topic is so poor that they don't even realise they're not asking the right questions.

    2. Yet Another Anonymous coward Silver badge

      re: If there is no suggestion that these companies are breaking the law, then why the big fuss?

      Then change the law.

      There was a fuss when companies were advertising holidays to Thailand where you could fuck X-year olds because it was legal there.

      A media fuss, and a new law banning you from doing something illegal here but legal there

  8. Beaufin

    Surely the people at fault are the law makers not the businesses.

    If you make laws that allow tax to be legally avoided you shouldn't be surprised that

    companies choose to arrange their affairs to minimise their tax.

    Businesses are obliged to make as much money as possible for their shareholders.

    1. Psyx
      Holmes

      "Businesses are obliged to make as much money as possible for their shareholders."

      Obliged in what manner?

      Obliged by capitalism, perhaps. But it's purely an phantasmal intellectual structure that dictates that obligation to capitalism is greater than ethical obligation, or obligation to the 'local' community where business is done. Companies choose to prioritise shareholder profit because they want to. Some companies reject this model and prioritise ethical business. Who's to say who is 'right'?

      1. Pete 2

        Shareholder power

        > Obliged in what manner?

        Obliged by the need to have other people invest their money in the business. Nobody invests in a business because they "like" it, or have some sentimental attachment. They put their money at risk (and it IS a risk: the price of shares goes down as well as up) in the expectation that they will make a profit - either though rising share value, or from the dividends that companies pay.

        The greater the profit a company makes, the greater the benefit the shareholders receive (and as a side-effect, the higher the pay of the directors & employees, provided they can leverage it). Therefore it's the shareholders who are the main driver: directly or indirectly, for increasing profits. They are a remarkably fickle lot and will dismiss directors as soon as the profits stop coming. However, that's the game. You want investors? They want your profits.

        1. Psyx
          Pint

          Re: Shareholder power

          "Obliged by the need to have other people invest their money in the business."

          Only based on the paradigm that assumes investors always approach to maximise personal profits, regardless of ethics, sustainability et al. Now most do - especially when those investors are themselves investment companies which make more of the market than individual investors - but that's only because of personal choice based on financial greed. That's not the *only* choice.

          "Nobody invests in a business because they "like" it, or have some sentimental attachment."

          But... they do. Many people are now looking to invest more ethically, even at the cost of profits. That's a small number of investors, but there is no rule in place that says "investors must always maximise profits" other than our self-imposed ideas about personal wealth.

          Also: Tell that to fans investing in their football clubs, or people buying shares in companies they are 'close' to in some way.

          Basically: It ain't going to happen, and it's a pipe dream, but *individual* investors (rather than companies made to invest in order to simply make cash) can and are sometimes steered by more than profit, and there is space in the markets for publicly traded companies which put ethics, re-investment in the community, and sustainability ahead of shareholder profits.

      2. Anonymous Coward
        Anonymous Coward

        The ones that maximise profit and minimise taxes are right, the others are probably breaking the law (unless their shareholders have given them written permission to piss away company money, or the management/shareholders are the same people).

      3. Peter Gathercole Silver badge

        In the US, they are mandated

        The members of the board of a US company can be personally taken to court for negligence by the shareholders if they don't do everything reasonably possible to maximise the share-holder return. It's an aspect of fiduciary duty.

        1. John Brown (no body) Silver badge
          WTF?

          Re: In the US, they are mandated

          The members of the board of a US company can be personally taken to court for negligence by the shareholders if they don't do everything reasonably possible to maximise the share-holder return. It's an aspect of fiduciary duty."

          Seems odd that Starbucks should invest so much money over the last 15 years in their UK operation if it's incapable of making a profit. Maybe the directors should have been fired long ago. Certainly the shareholder should be kicking up a stick about it :-)

      4. James Micallef Silver badge
        Facepalm

        "Obliged in what manner?"

        Obliged by fiduciary duty to the shareholders. Shareholders can sue company directors if the directors are knowingly leaving money on the table that they could legally take.

        1. Psyx
          WTF?

          "Obliged by fiduciary duty to the shareholders. Shareholders can sue company directors if the directors are knowingly leaving money on the table that they could legally take."

          Wow. I hope to hell that law only exists in the US, because it kinda sucks balls that companies are legally forced to be capitalist, immoral gouging machines!

          I have learned a new thing today!

          1. Jess--

            similar rules apply to the uk companies too, since company directors (whether a large or small company) must always act in the best interests of the company

            if an accountant says to a director "if you do this you can avoid £££ in tax and it's legal" then it would not be in the companies best interests for the directors to follow a different route

            1. Psyx

              "similar rules apply to the uk companies too, since company directors (whether a large or small company) must always act in the best interests of the company"

              At least best interest gives wriggle room over sheer "You must earm morh $$$!!!"

              A director could argue that a company's best interest is to re-invest in the community/maintain a sustainable business over short-term-gain/re-invest ethically et al.

  9. Buzzword

    Starbucks (UK)'s "losses" appear to stem from Transfer Pricing in two areas:

    1) buying overpriced coffee beans from a Starbucks (Switzerland); and

    2) paying a 6% royalty for use of the brand name to Starbucks (Netherlands).

    The first one sounds a bit dodgy: paying over the odds for goods is basically illegal under transfer pricing rules. HMRC could fall on that like a ton of bricks. The latter however is perfectly fair. Try opening a coffee shop without the Starbucks brand and see how much money you can make: you'll quickly wish you had a swishy green logo to attract customers.

    Amazon and Google appear to be operating perfectly within the law.

    1. Anonymous Coward
      Anonymous Coward

      Actually, I'd guess Costa and Nero

      Who both pay their taxes are probably doing quite well out the Starbucks brand's new found toxicity. This is a good thing as both make a nicer latte than does Starbucks.

    2. Phil O'Sophical Silver badge
      Thumb Up

      "Try opening a coffee shop without the Starbucks brand and see how much money you can make"

      They'd get my money!

      1. Allonymous Coward
        Coat

        Re: "Try opening a coffee shop without the Starbucks brand and see how much money you can make"

        They already get my money. I make a point of not buying coffee from Starbucks.

        Coat, because I take mine and go across the road to their competitors.

    3. Anonymous Coward
      Anonymous Coward

      EU Tax Harmonisation?

      The EU could at least level the playing field within the EU (that's what it's supposed to do anyway).

      Then the EU can apply duty on the import of beans from Switzerland (famous for its coffee growing?).

      Try doing this kind of thing in the USA; the states may compete on taxation a little, but sooner or later the bucks stop inside the US tax jurisdiction.

    4. Anonymous Coward
      FAIL

      You mean like the 40 odd independent coffee shops in Totnes that appear to make enough money to survive and recently saw off Costa you mean?

  10. Neil B
    Thumb Down

    An amusing waste of time. "We're not accusing you of being illegal, we're accusing you of being immoral."

    And...so what? What're they going to do next, impose a "morality tax"? Lawyers and accountants will be going bankrupt by the million.

    In principle I feel that a company trading in the UK should pay taxes in the UK, but if what these corporations are doing is legal, there is no recourse except to change the law.

    And there's not one person among us, I have no doubt, who if offered a way to legally reduce their tax bill by 90% wouldn't do so in an instant.

    1. hplasm Silver badge
      Devil

      Lawyers and accountants will be going bankrupt by the million.

      You say that like it is a bad thing...

    2. Drat

      If this raises awareness then that is a good thing. When I go for a coffee I can chose to buy from a company that will syphon more of my money out of the country thus making the UK poorer (Starbucks), or I can buy from a company that will keep more of my money in the UK (Nero, Costa etc.). If enough people did this then that would hurt those companies making in what is my view an immoral choice, and it might force them to start behaving in a more moral manner.

      Brand image is important. If their bean counters save a few pounds but damage the brand and thus their sales they will change their ways.

  11. Dazed and Confused

    Who wrote the laws

    OK, so who wrote the rules here?

    If you run a company you need to play by the rules you are given, you don't write them

    The MPs are paid, by us the poor sods who have to pay taxes.

    If they are unhappy about the countries tax laws they should bloody well do their jobs and write better laws.

    You can't complain at someone for obeying the law, especially when you wrote the damn law.

  12. David Neil

    Immoral

    I feel it's immoral to demand a proportion of my earnings via threats against the person, to then demand another cut when I happen to spend that money, and another cut on any savings I might have. If I can take any measures to minimise my exposure to this shakedown racket I will, and I fully encourage anyone else to do the same.

    If you don't like the current system, change the law, don't sit there squealing like a 6th form debate team on the morailty of the matter, do something about it or shut the fuck up

    1. Anonymous Coward
      Anonymous Coward

      Re: Something is being done about it......

      Starting with naming and shaming. The local Starbucks doesn't look so busy these days while the local Costa looks to be doing quite well. The extraction of reasonableness can be a long and painful process; at least for the extractee.

    2. ravenviz

      Re: Who wrote the laws

      write better laws

      I suspect that wil be an outcome.

      1. Tom 35 Silver badge

        Re: Who wrote the laws

        Brown envelopes will be passed around and the wealthy will continue not paying tax. Might even get a new loop hole.

        I suspect that will be an outcome.

      2. Vic

        Re: Who wrote the laws

        >> write better laws

        > I suspect that wil be an outcome.

        It would be a first...

        Vic.

      3. BigFire

        Re: Who wrote the laws

        Nah. There are tax attorney and specialist whose sole function is to find legal method of avoiding tax.

    3. Psyx
      WTF?

      Re: Who wrote the laws

      "If they are unhappy about the countries tax laws they should bloody well do their jobs and write better laws."

      MPs don't write laws.

      1. Dazed and Confused

        Re: Who wrote the laws

        > MPs don't write laws.

        It's MP's job to write laws, the fact that they are useless and out source the drafting of laws to "interested parties" doesn't stop it being their fault. They can't blame anyone else if the laws they are responsible for are bloody stupid.

  13. Trollslayer Silver badge
    Flame

    How they do it

    They buy the coffee for their UK operation through their Swiss operation at a 20% hike and then hide the Swiss profits elsewhere.

    1. Anonymous Coward
      Anonymous Coward

      Re: How they do it

      Maybe its fairtrade coffee grown in organic soil, and shipped using windpower and roasted using solar... That'll add 20% right there...

    2. Silverburn

      Re: How they do it

      then hide the Swiss profits elsewhere.

      Most likely in....errr...Switzerland. Banking secrecy laws an' all that, and even then, the TAX cooperation agreements need a legal case from the originating country, and only apply to individuals.

      The added advantage of buying in CH is the 8% VAT rate, compared to the 20% in the UK. Even taking into consideration the "import duty" of the UK (if it even applies), I bet they're still quids in.

  14. Mad Mike

    Simple Rules

    There is a simple rule that every chancellor has failed to grasp for years. Gordon Brown was one of the worst, but Osbourne is showing characteristics of it as well. The rule.......The more complex your tax system, the more avoidance will occur, because more loopholes will appear due to the complexity. The simpler the system, the fewer loopholes, the less avoidance takes place. The avoidance is also much easier to see.

    The words moral and company haven't appeared in the same sentence for years, just the same as moral and MP don't either. Both MPs and companies are solely out for what they can get.

  15. Anonymous Coward
    Anonymous Coward

    If I sold my house to a family member or a friend at a price that bore no relation to its market value, as a tax avoidance measure, HMRC would come down on me like a tonne of bricks. So how come these non-market-rate pricing deals between units of the same business are totally ignored? Starbucks UK paying over the market cost of beans from Starbucks Switzerland to register an artificial loss... that's not immoral that's illegal. Sort it out, HRMC. Book every single Starbucks UK board member for fraud, tax evasion, the works, and see if Starbucks suddenly starts to turn a realistic profit...

  16. LinkOfHyrule
    Paris Hilton

    If something is a bit wonky...

    ...you could describe it as BENT!

    Paris because she actually has her breasts registered to an off-shore tax haven!

    1. Chika
      Paris Hilton

      Re: If something is a bit wonky...

      Don't you mean Paris has her breasts registered as an off-shore tax haven? ;)

      1. TRT Silver badge

        Re: If something is a bit wonky...

        Bank of Naipples?

        1. LinkOfHyrule
          Happy

          Re: If something is a bit wonky...

          The bank that likes to say "oh fuck yeah"

  17. David Ward 1

    Who has apple paid off to not be in there? There have been several reports of late about how little tax they pay in the UK but they seem to have been missed in this grouping.. sureley they are a worse offender than Google or Amazon in terms of tax paid vs revenue?

    1. Anonymous Coward
      Anonymous Coward

      re. Apple

      I think you'll find that a lot of Apple's product is sold via third parties like Amazon.

      They've even managed to outsource their tax-avoidance!

    2. Anonymous Coward
      Anonymous Coward

      Reply to untitled apple comment from David Ward

      Perhaps the ministers were kept quiet with some nice,shiny rounded-corner rectangles, (now there's a bit of political analysis worth doing)

      Seriously though, if the UK decided to tax these massive companies more (who also bring in jobs, BTW) their corporate beancounters will simply crunch the numbers and decide when it is best to cut and run. Don't forget that Fortune 100 companies can hire lawyers who understand tax legislation MUCH BETTER than ANY of these elected windbags.

      Or are we just looking at the first salvos of an upcoming trade war......either way it is bad for business.

  18. The BigYin
    Flame

    So....

    ...government passes tax laws with loop-holes.

    Government cuts HMRC inspectors.

    Government follows advice from accountants and bankers on tax (those with the biggest incentive to avoid it).

    Government engages in fiddles to avoid revealing true costs (i.e. PFI)

    Government allows "non-doms" to get away with little or no tax (when they aren't really non-dom)

    Government...it's long list...

    What the government is annoyed at here is that the information is public. People only used to suspect that the major high-street chains and other paid little-to-no tax; but now we know. Up until they information was public, the government were very happy for their rich cronies to get away with paying nothing, whilst the lower-middle and working class get gouged for just about every penny.

    These companies are wrong for not paying their due, but the government is even more wrong for trying to be all high-and-might about it. It was the Tories and Labour who created this mess in the first place.

    1. The BigYin

      Re: So....

      Oh, and I forgot one, if you want to avoid paying billions in tax; it will only cost you a nice dinner and a handshake!

  19. Longrod_von_Hugendong
    Facepalm

    What a load of bollocks...

    Let me sum this up...

    1) Morality and the law *DO NOT* have any connection, look at your own expenses at the end of the month, yes i know you fiddle em a bit, everyone who has expenses does, or you have done at some point.

    2) The companies all work within the law, LAW IS THE WORD, its what you HAVE TO OBEY, and you obey the word of the law *NOT* what it means or what its mean to mean.

    3) There is nothing that can be done, WITHOUT CHANGING THE LAW <- that is the important bit, refer back to point number 1 and 2.

    4) Nothing will change since all the MP's own companies are doing exactly the same thing, but at a lower point so we dont know about it.

    5) If you are a working man, then bend over, here it comes again - you are happy not to risk anything in the world of business, so you sheeple get to reap the rewards.

    6) This post will be down voted so hard, it might actually bounce :D - mind you, i dont actually care. (BTW this is a not a troll post, its how it really works in the world.)

  20. Tom Wood

    This is Britain

    Our laws are one thing. There are a lot of unwritten rules too.

    It's like lots of things in life - they're better if everyone plays by the spirit of the law as well as the letter of it. Making some attempt to be reasonable counts for a lot.

    Google, Starbucks, Amazon et al are like a greedy person who spends hours grazing at an all-you-can-eat buffet, then walks out with bulging pockets full of food. Yes, they maybe didn't break any rules, but they are certainly not being a good sport about it.

    I quite like the idea of shaming companies into being reasonable - and consumers voting with their feet. With Starbucks it is easy, as coffee shops are everywhere and all provide similar products for similar prices; sadly Google and Amazon both sport "one of a kind" status which limits your ability to go elsewhere without detriment to yourself (poorer search results than Google; more expensive and reduced choice than Amazon).

    1. I'm Brian and so's my wife

      Re: This is Britain

      For the former: duckduckgo.com (for general searches, anyway)

      For the latter: more difficult, but you'd do well to hit some of the price comparison sites and see what other (e)retailers are out there.

    2. John Brown (no body) Silver badge
      Flame

      Re: This is Britain

      @Tom Wood.

      Yes, here in the UK the law "in spirit" rather than "by the letter" is how it's generally been run over the years. In the US, the "letter" of the law seems to be the be all and all.

      This leads to grey areas which most sensible and normal people are aware of and leads to gentle "bending" of the law in minor cases. The problems arise when too many people push the limits to find out where the line is. When too many bend the law and push the limits, that's when more restrictive and "specialist" laws appear which restrict everyone in ways that usually affects the rest of us in negative ways.

      It seems that all of these "worst offenders" are US companies who don't understand the local culture and are riding roughshod by imposing their own. Oh wait....

      Not sure I've been as clear as I mean to be, but sod it, I know what I mean :-)

  21. Madboater

    Close the loop-holes

    You know, change the bits you have power over, rather than "We fukced up, you have taken advantage of that, thats un-fair". Sorry what was the quote "its within the rules".

  22. Omgwtfbbqtime Silver badge
    Boffin

    Easy solution

    adds another complication but hey that's the tax system for you.

    All you have to do is tax all royalty payments and give tax relief on all royalty reciepts.

    Suddenly it becomes better to keep your royalty holder in the UK.

    No need for cross border tariffs to annoy the EU.

  23. Anonymous Coward
    Anonymous Coward

    A tax on a sale...

    ...should be a tax on a sale in that teritory. When I buy something, the price is made up of X amount of tax. This money should automatically be put to one side and go to the tax man.

    Yes, that would mean that the cheap goods from china would automatically have 20% added to them, even on e-bay, but that is the only way I can see of getting around the problem.

    1. Tom Wood

      Re: A tax on a sale...

      Um, that is (similar to) VAT. Starbucks, Amazon and Google all collect VAT and do pay it to the government. Note it's a tax on the value added, not the whole of the sale, otherwise anything that is bought and resold (e.g. by a wholesaler) would get very expensive very quickly.

      The argument here is about corporation tax i.e. a tax on corporate profits.

      1. JeeBee
        Devil

        Re: A tax on a sale...

        I think his point is that you can drop corporation tax (maybe for certain classes of businesses - let's argue that Coffee Shops is a class of UK business) and introduce a final sale tax (fixed percentage of final sale price, e.g., 10%, in addition to VAT) to all business -> consumer transactions.

        Starbucks: Doesn't benefit from the drop in corporation tax, has to raise price of coffee to compensate for additional sales tax, because they are tied to paying 20% over market price for coffee from their profit-offshoring subsidiary.

        £3.00 ("zero profit") -> £3.00 -> £3.30 customer price

        Costa, Nero, Nanny Tea Shoppe, etc: Benefits from drop in corporation tax (24% -> 10%), and can use that drop to reduce their pre-sales-tax price of their coffees.

        £3.00 (100p profit, 24p of which goes in corporation tax = 76p net) -> £2.85 (85p profit, 8.5p corporation tax, 76.5p net) -> £3.14 customer price

        Therefore making the tax avoiding scummy immoral company less competitive compared to the moral companies...

      2. Geoff332

        Re: A tax on a sale...

        Amazon also avoid VAT: mostly by selling through places like Jersey, where there is no VAT charged then shipping to mainland UK. This gives them quite an advantage over Waterstones, WH Smiths and HMV - being able to undercut prices by 20%.

        I'm not sure if Google does anything similar: they may well do.

  24. Dm4

    Welcome to the capitalist world...

    We all love good value for money, but we cant see beyond our noses.

    Large foreign corporations undercut our local smaller business, ultimately putting them out of business and then take our money outside of the UK. We are shooting our selves in the foot !

    Aside.... it is not just Google, Amazon and Starbucks that are at this. Any business with an inventive accountant will look at methods to pay the least amount of tax they have to.

    Make the tax system favourable to bring business to the UK and make them pay accordingly.

    It might put prices up, but at least the high street shop might be able to compete.

    =========

    Sent from my Google Phone

    1. hplasm Silver badge
      Devil

      Re: Welcome to the capitalist world...

      "We all love good value for money"

      That rules out Starbucks, then.

  25. J.G.Harston Silver badge

    They're US companies, surely they should be paying tax in the US.

    1. ravenviz

      The point is they're not paying corporation tax on profits generated by sales in UK.

    2. Yet Another Anonymous coward Silver badge

      No they are Bahamanian (sp?) Grand-Caymen or Liberian companies.

      They just happen to have a lot of US shareholders

  26. Neil Barnes Silver badge

    What's two plus two?

    Engineer: about four

    Arithmeticion: four

    Accountant: What would you like it to be?

    Twenty million profit on nine point three billion turnover? Why are they in business? Their shareholders can't be getting a good ROI off that one.

    1. TeeCee Gold badge
      Headmaster

      Re: What's two plus two?

      "Arithmeticion"

      Did you mean "Mathematician"?

      1. John G Imrie Silver badge

        Did you mean "Mathematician"?

        No a Mathematician would reply, define 'two' and what do you mean by 'plus'

  27. Anonymous Coward
    Anonymous Coward

    At least pretend to be playing nicely

    If someone offered me a way to reduce my bills by 90% legally I'd be there. Who wouldn't?

    But if/when it became public, I'd apologise, spout some crap about not knowing what my accountant was doing (as I don't understand tax)... and then change it to 80% instead.

    A gross over simplification but how about this....

    IF (multinational=true AND Gross UK income>=£25m) then

    Tax Gross UK income

    ELSE

    Tax profits

  28. squilookle
    Coffee/keyboard

    "MPs didn't shrink from telling senior execs from Amazon, Starbucks and Google that they were "ridiculous", "unbelievable" and "immoral""

  29. Anonymous Coward
    Anonymous Coward

    No Vodafone?

    Oh no, that's right, they avoid tax with the permission of HMRC because the heads of both are mates.

  30. Anonymous Coward
    Anonymous Coward

    Ethics Morality and Law

    Some commentators have said these companies are working within the law so it's no big thing and morality doesn't come into it

    But some of these companies make a big noise of their proud ethical stance.

    Starbucks "believes that conducting business ethically and striving to do the right thing are vital to the success of the company" http://starbucks.co.uk/about-us/company-information/business-ethics-and-compliance

    Googles "no evil" is well known

    So while a certain coffee chain goes out its way to pay a reasonable price for its coffee beans from hard pressed farmers, its not so happy to contribut back to the well-being of the country where the bulk of its profit on the final product is actually generated. Tax income paid to the country which helps provide some of the nation's services towards the coffee chain's staff and customers.

    Lastly, the PAC is a Select Committee "... check and report on areas ranging from the work of government departments to economic affairs. The results of these inquiries are public and many require a response from the government. "

    So the PAC is doing its job by" interviewing" representatives of big business on how it carries out trade.

    1. Dr Wadd

      Re: Ethics Morality and Law

      Somewhat ironically, when attempting to click through for the PDF detailing Starbucks' ethical stance the file can't be found.

    2. John Brown (no body) Silver badge

      Re: Ethics Morality and Law

      Good call AC

      Looking at Starbuck website, we find the "Standards of Business Conduct" is not accessible (in any of the 9 translations.

      Meanwhile, on their "Shared Planet" page they state "We've always been committed to doing business responsibly and conducting ourselves in ways that earn the trust and respect of our customers and neighbours "

      In their Mission Statement, they claim "Every store is part of a community, and we take our responsibility to be good neighbours seriously."

      They seem to be losing some of that trust and respect by being unethical neighbours. Probably a conflict between their stated aims of being ethical and US laws requiring them to earn profits at all costs.

  31. The Axe

    Revenue/Sales/Turnover != Profit

    Corporation tax is only paid on profit. It has nothing to do with revenue, sales, or turnover. Some companies have high costs and make a profit by small margins on a high turnover. Others do it by making a big margin on a small turnover. Taxing sales (which is effectively VAT) would harm the low margin companies.

    1. Yet Another Anonymous coward Silver badge

      Re: Revenue/Sales/Turnover != Profit

      And some do it by pretending that they have to pay a huge royalty to a subsiduary in Grand-Caymen or the Dutch Antilles

  32. MrXavia
    FAIL

    Simple solution, lower corporation tax, make it more sense for them to put their profits here than abroad, and then they WILL make their profits arrive here, and maybe move their HQ's here... it is as simple as that...

    I would rather the UK gov get a 10% cut of global profits, than a 30% cut of nearly no profits...

    I am sure I will get downvotes, but as this is a tech blog, I hope somebody here can do maths... For sure the guys in charge of our economy cant....

    The companies are ran for shareholders, so it is in their interest to HQ where they will pay less tax...

    VAT is where we make money from big companies running in the UK, 20% on pretty much all sales.. So in effect for ever £1 the consumer spends, roughly 17p goes to the treasury (83p ex-vat, VAT @20% is 17p *)

    *figures are approximate

    1. stanimir
      Go

      That's true: 10% corporate tax is available in EU

      I just do not understand the fuss, the big money comes from the VAT not taxing the profit. Well I understand - media stunt.

      Taxing companies profits is somehow weird as their is dividend tax too. The tax exists mostly to prevent hoarding large lumps of unused cash.

    2. Yet Another Anonymous coward Silver badge

      Lower it to below the zero % for the Dutch Antilles?

      And of course the same would apply to all the companies currently paying tax. So Tesco, M&S, RollsRoyce etc would suddenyly have billions to give to their directors?

  33. matthewjs

    "I'm a satisfied customer," Austin Mitchell, Labour MP, said. "I love those emails you send asking me if I want that biography of John Major".

    Knight this man for services to sarcasm!

    1. EddieD

      Read his blog - it's about the best that an MP has made.

    2. Anonymous Coward
      Anonymous Coward

      You missed the punchline:

      biography of John Major = Fifty Shades of Grey

  34. Mad Jack
    Black Helicopters

    Perhaps Hodgy should take a good look at herself in the mirror?

    http://www.telegraph.co.uk/finance/businesslatestnews/9668396/Margaret-Hodges-family-company-pays-just-0.01pc-tax-on-2.1bn-of-business-generated-in-the-UK.html

    I vote for her - as hippocrite of the year!

    1. TRT Silver badge

      Re: Perhaps Hodgy should take a good look at herself in the mirror?

      I suspect the meeting was more of a "You made billions in profits in the UK and I have here a £10 note which is actually your tax return... How did you do it? Come on, there's only 60 days until I have to file my returns."

  35. Triggerfish

    Kettles question Pots

    triy and decide whose blackest

  36. andy gibson

    Margaret Hodge - tax avoider

    Excuse the source:

    Multi-millionaire Labour MP's family business 'paid just 0.25% tax on its profits'

    http://www.dailymail.co.uk/news/article-2230915/Margaret-Hodge-Multi-millionaire-Labour-MPs-family-business-paid-just-0-25-tax-profits.html

    1. Geoff332
      FAIL

      Re: Margaret Hodge - tax avoider

      I'd probably look for a more objective - or at least factual - source than the Mail. They seem to shift between Revenue and Profit at will and aren't particularly clear on which is which. They report global revenue, global profits, and the percentage of revenue earned in the UK. They skip profits in the UK (which is the bit they are actually taxed on). Stemcor's explanation is they had a really bad year in the UK - consequently their profits were poor and that's what they paid tax on. They also overpaid in the previous year, further reducing their 2011 tax bill.

      There may be a story here but the Mail's penchant for skipping facts to get to sensationalism has left it out.

  37. Velv Silver badge
    FAIL

    I'm not defending the large corporations as they are playing the rules to their own advantage, however those crying foul really need to learn a bit more about business:

    "Turnover is vanity, profit is sanity, cash is reality"

    It IS possible for a business to turn over billions and make little or no profit. Turnover and profit are NOT directly linked. Some MPs and Journalists need to learn some basic business facts.

    1. JeeBee
      FAIL

      Maybe those businesses should be registered as Not For Profit entities then...

      Fact is, Starbucks, globally, is making a massive profit once it reconciles all the money that it has moved around the globe avoiding tax.

      Problem is, all that money is in bank accounts in the final resting place of that moving, e.g., Bermuda. They can't move it back without incurring corporation tax on it! This is why Apple is trying to press for a reduced rate for repatriation of money into the US!

  38. Anonymous Coward
    Anonymous Coward

    Globalisation

    As ever, the large multi-nationals will do their best to exploit the globalisation of the market - which is to be expected. "There are no border...", "We are an EU-wide operation..." etc, and yet when the customer tries to take advantage of globalisation "I want to get around geoblocking" "I want to get my TV from Greece.." the same organisations go postal.

    Globalisation I can live with - hypocrisy I can't

  39. Anonymous Coward
    Anonymous Coward

    Immoral

    What are these highly paid MPs doing poncing around interviewing executives of foreign companies, calling them immoral or whatever, when after all they cannot do anything to them? Is it for show or something? Or what? It doesn't seem a very useful use of time.

  40. Chris Rowland

    I wonder if a turnover tax would work, maybe at about 1%

    Companies would pay tax either on their profit or on their turnover, whichever is higher.

    This isn't the same as VAT because that's only paid on the change in value.

  41. Anonymous Coward
    Anonymous Coward

    Some blatant porkies going on here

    So Amazon are claiming UK revenues of just £200m in 2011 against £9.1bn European turnover? So the UK is just 2% of their business and they're about 10% of the size of Argos Online in the UK (£1.9bn turnover online in 2011)? Riiiight. Someone is telling some enormous whoppers here.

  42. Ed 11

    Two thoughts. 1) Morality is irrelevent unless you are a signed up member of a cult, sorry, religion, where there is a book in which 'someone' has codified morals. 2) Much of the coverage I've seen, and indeed this article, talk about the tax rate against revenue. I may not be a tax advisor, but I am quite certain tax is charged on profits, not revenues.

    1. John Brown (no body) Silver badge
      FAIL

      Morality is irrelevent unless you are a signed up member of a cult, sorry, religion, where there is a book in which 'someone' has codified morals.

      So are you immoral or amoral?

      Personally, I try to fit in with the morals, mores and values of the society in which I live, even if many of those morals, mores and values have an origin in some sky-pixie book. It generally makes for a simpler and more civil life.

  43. TRT Silver badge
    Coat

    They should throw the book at them...

    providing Amazon deliver it on time.

  44. Burch

    These companies cannot be shamed

    That's a waste of time. Change the rules so they can't get away with this, and if they fail to comply tell them the UK will not allow them to do business here.

  45. Anonymous Coward
    Anonymous Coward

    We need to relook at the way we tax

    The existing tax system was created hundreds of years ago and not really designed for todays automated fast transactions mixed with ability to geographically play games with transfer pricing.

    Essentially tax accountants look at tax as a least cost option, transferring tangible and intangible goods (some times even physically) to reduce exposure, essentially Tax is seen a variable cost and has a market price.

    Even back in the 80's when I used to play with "container accounting" the ability to do it properly was down to time and effort, these days a lot of paperwork is not longer on paper and it can be fully automated for some countries.

    Overall we need a tax system that is fit for purpose in todays technological world.

    Coming back to corporation tax what we really need to do is have a corporation tax rate that is lower (or abolished and/or replaced with taxes which track the money and funds), and some form of guarantee regarding the period it remains stable for until the rate is reviewed. Then sit back and effectively be an aircraft carrier for European trade, even the likes of Google employ people with good modern economy skills, who themselves pay taxes in Ireland on income and expenditure.

    Too much emphasis is placed on profit and not enough with tracking the money which is taken out of the country.

  46. KAMiKZ
    FAIL

    We "Do No Evi". We're so cool, we're so smart ,and not a bozo in suits, yeah, we're so cool. our products are all free. and, erm, oh yeah open source. we're so cool. bull fucking shit.

    And last time I went to Zurich, the cheapest hotel was nearly $250 a night, and no restaurant was south of $60 ahead. Why the fuck would you trade coffee with a Swiss company who's more known for their banking than past colonies around the globe, one of which of such colonies might grow coffee beans? bull fucking shit.

  47. Daz555

    Time to bring these big companies into line - regardless of tax loopholes. Pay up or get out of our economy - we won't miss you as someone will simply step up to replace you.

  48. Geoff332

    it's not that simple...

    This is a slightly tricky area as this is dealing not with UK tax law, but with international tax law. So it's very hard for the UK to act unilaterally (and, if they do, it gives license for other countries to act unilaterally - which does not end well). To address this requires EU-wide tax laws (many of these already exist, but those are the major loopholes). Should the UK decide to close them all by themselves, it could well have the converse effect of driving businesses currently based in the UK out of the country.

    This is even more true as the world changes. Digital and electronic services can be easily produced and consumed in two different places (when you go to a website with some google placed advertisement in it, the servers that performed the analysis and placed the ad may well be located in the US. Or Asia. Or Russia. Or somewhere just up the road. How and where this sort of complex transaction should be taxed is very difficult to figure out and requires at a minimum international co-operation and, as an ideal solution - and international tax framework.

    That's unlikely to happen - the nearest we could hope for in the short-medium term is a pan-European tax/regulation system. But the UK is busily pissing off (and on) the EU, so that's not very likely to happen either.

  49. Scotty
    Stop

    Duty, not tax

    Time for the government to introduce duty on the production of said coffees at a local level. If it works with booze & fuel, it will work with phonecalls, searches & caffinated brews. Removes the vat manipulation & fraud.

  50. The Onymous Coward
    Coat

    She's having a Laffer

    The fact that Margaret Hodge, house flipper and therefore tax avoider, has the temerity to grill Starbucks on the very same subject, makes a mocha-ry of the whole process.

    I'll buy my coffee from the first exec who has the balls to explain the Laffer curve to the assorted morons we have elected as our leaders.

  51. cduance

    Pay unto Caesar what is Caesars

    If Starbucks isn't making a profit here I suggest they close down and Costa can pick up the slack at least they paid 15 million tax on lower revenues. If a business isn't making a profit it should clear the way for profitable businesses to deliver what the customers want, what the shareholders want and take social corporate responsibility to do some good in the country they choose to operate in.

  52. Nelbert Noggins

    Maybe I'm missing something but tax minimisation isn't illegal and many expax/offshore contractors know a good company who can do this for them, not just the SME or globals.

    Tax Evasion is illegal and nobody would claim otherwise.

    Contractors, SMEs and corporations are usually very careful about which side of the line they operate on and do everything legally but for their own best interests. The primary interest being keeping as much of the money they get as possible.

    Obviously global corporations can afford whole departments to move things around, stay within the laws and minimise their taxes. Whether it's morally right or wrong seems a strange objection when they are not breaking any laws.

    Legally many government ministers didn't break any laws, morally and ethically their decisions were questionable, but as they tried to defend 'it was within the rules'

    If the UK government wants to stop the losses then sort the laws/legislation out. Trying to stir up ill feeling against corporations because they use the rules to their own advantages to minimise their tax, rather than fixing the rules to make it harder for them to do seems like nothing more than 'we need to appear to be doing something'

    Regardless of whether people think it's morally right/wrong or distasteful... how can you attack someone for knowing and using the rules to their own advantage...

    How many people, including the government, would honestly do any different?

  53. batfastad

    Minimum

    So these entities paid the minimum tax that they are legally entitled to pay? And that's immoral?

    Well that makes pretty much every business and UK tax payer immoral. I've never met anyone who has voluntarily paid more tax than they are legally obliged to. How on earth can politicians judge peoples' morality, many of them having been shown to have been stealing from the taxpayer on a grand scale.

    The awareness of a problem, criticism of others, and failing to close the loopholes; that is immoral.

    "Politicians are not born, they are excreted."

    - Marcus Tullius Cicero

    1. Psyx
      Stop

      Re: Minimum

      "Well that makes pretty much every business and UK tax payer immoral. I've never met anyone who has voluntarily paid more tax than they are legally obliged to."

      I disagree.

      We could all pay less tax, if we all hired accountants and didn't mind shuffling some money around and overseas. The difference is that the typical citizen accepts that he has to pay his fair whack, and their income is sufficiently low that it might not be cost-effective to hire an accountant to play silly-buggers with the money.

  54. cs94njw

    I guess the only solution is to favour tax paying establishments.

    Perhaps only running deals with tax paying companies, or inviting them to the special meetings. Or even just the public choosing who to go to (Hmm... not that keen on not using Google, they're quite convenient... :( ) Ditto on Amazon too :(...

  55. cs94njw
    Thumb Down

    *cough* Lewis Hamilton *cough*

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