Starbucks Tax Backlash: Firm Pledges Action

Starbucks has announced it is reviewing its tax affairs after a public backlash over the low amount of tax the US company pays in the UK.

The Seattle-based company reportedly paid just £8.6m in corporation tax in 14 years of trading in Britain.

It recently revealed it paid no corporation tax for the past three years, despite sales of £1.2bn in the UK.

Now, the coffee chain has revealed it is in talks with Her Majesty's Revenue and Customs (HMRC) and the Treasury over its tax affairs as part of a bid to "build public trust".

"Starbucks is committed to the UK for the long term and we have invested more than £200m in our UK business over the past 12 years," the statement said.

"Starbucks has complied with all the tax laws in this country but has regretfully not been as profitable as we would have liked.

"We have listened to feedback from our customers and employees, and understand that to maintain and further build public trust we need to do more.

"As part of this we are looking at our tax approach in the UK.

"The company has been in discussions with HMRC for some time and is also in talks with the Treasury."

The firm is one of many multinationals to have the amount of tax they pay in the UK put under the spotlight.

Chancellor George Osborne is set to address the issue in his Autumn Statement on December 5.

On Sunday Mr Osborne announced extra investment to help clamp down on the multinational companies' tax avoidance.

Last month, the Commons Public Accounts Committee (PAC), which is charged with monitoring government financial affairs, questioned senior executives from Starbucks, Google and Amazon on why they pay so little tax in the UK while racking up millions of pounds' worth of sales.

"I assure you we are not making money," Troy Alstead, the chief financial officer of Starbucks, told the committee.

"It's very unfortunate. We're not at all pleased about our financial performance here. It's fundamentally true everything we are saying and everything we have said historically."

His comments came despite operating more than 700 UK stores and employing nearly 8,500 people, along with plans to employ another 6,000 staff and open 300 outlets.

Companies are able to sidestep the taxman legally by conducting different operations in different countries, and constructing complex global frameworks that allow them to move money through offshore subsidiaries and locations.