Starbucks may face UK tax probe

Wed Oct 17, 2012 7:18am EDT
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By Tom Bergin

LONDON (Reuters) - Starbucks (SBUX.O: Quote) may face an inquiry into its British tax affairs after a senior member of parliament (MP) called for an investigation into how the company could avoid paying tax on 1.2 billion pounds ($1.93 billion) of sales since 2009.

A Reuters report that Starbucks had been telling investors its UK unit was highly profitable while telling the UK authorities that the unit was lossmaking, and thereby not liable for tax, undermined public trust in the tax system, MPs said.

Margaret Hodge, Chair of the Public Accounts Committee (PAC) and an MP for the centre-left opposition Labour party, said Her Majesty's Revenue and Customs (HMRC), the UK tax authority, should look into Starbucks' affairs.

Hodge, who has the authority to instigate an inquiry, said the head of HMRC would be testifying to the PAC, which is tasked with ensuring value in government financial affairs, next month and that she expected questions about Starbucks to be raised.

There was no evidence that Starbucks had been engaged in any kind of wrongdoing.

HMRC does not comment on individual taxpayers and rejected any challenge to its efficacy.

"We make sure that multinationals pay the right tax to the UK in accordance with UK tax law," it said in a statement.

Steve Baker, a member of parliament (MP) for the ruling centre-right Conservative party, also called for an inquiry.   Continued...

Raindrops are seen on the Starbucks logo on a signage at a branch of the coffee shop chain in London October 8, 2012. REUTERS/Luke Macgregor