I have to confess I am a tad "confused" over the bizarre announcement from Starbucks yesterday that they have decided to pay £10M per annum in Corporation Tax, irrespective of whether they are making profits.
1 On what basis have they derived this figure?
2 Either they owe corporation tax or they don't.
3 Since when was Corporation Tax (or for that matter any other tax) voluntary?
4 A cynic might suggest that this announcement suggests a certain fear within Starbucks about having their tax arrangements investigated. I trust and assume that this "voluntary" payment is not some form of cash appeasement designed to assuage HMRC/HMT?
5 Since when did HMRC accept "voluntary" donations?
6 How would HMRC account for this if they were (I don't think they will) to accept it?
HMRC is quite right when it said:
"Corporation tax is not a voluntary tax and Parliament sets out the rules and rates for businesses to follow. The public expects businesses to pay their fair share and HMRC will challenge, through the courts if necessary, any structures or tax payments that do not comply with the UK tax law."I have no qualms about companies or individuals seeking to reduce their tax liabilities (legally). However, wrt Starbucks and its bizarre announcement I would suggest that HMRC tells them to stuff it and to go in and conduct a root and branch audit of their tax affairs without delay (ie audit the hell out of them!).
I am aware that others are saying that Starbucks have somehow been "bullied" into this by the media/politicians. However, I don't buy that at all.
This stinks!
Tax does have to be taxing.
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Let us take each question in turn:-
ReplyDelete1. Tax planning management decision to mitigate any possible future penalties (fiscal or otherwise)
2. It must be assumed that they owe it or they would not have paid it
3. A no-brainer that does not need to be answered
4. The only fear will be the continued loss of footfall and revenue to true ethical traders
5. HMRC will, in todays climate, accept monetary amounts in any format, whether voluntary or otherwise, makes their books look better
6. Probably class it as a non-attributable amount accepted without predjudice (laugh) and punted into an interest bearing account whilst sorting out how to account for it - don't you have to establish a liability in order to identify the amount of tax due?
It seems a bit of a panic measure given the heat that was being focussed on the company, just hope HMRC are not so stupid as to trumpet it as their triumph, seem to recall it was the various campaign groups who got this in the public eye, along with some good work by M Hodge & colleagues.
I totally agree Ken but then would they not have to audit vodaphone, goldman sucks, amazon, ikea, zavvi, boots, all of the companies involved with the olympics who managed to avoid taxes amounting to more then the total cost of the games and of course cap gemini and other contractors that HMRC employ? Can't see that happening ever.
ReplyDeleteTo me the "red flag" is the "voluntary" payment; that is why imo particular attention should be paid to Starbucks.
DeleteHow about looking at their "off the books" earners that left with pay-offs and came back as consultants?
ReplyDeleteBet some of them were earning enough to keep the kiddies in private schools abroad where they lived, eh?
Nah, HMRC would never tolerate that shurely? (with apologies to Private Eye)