As the FT has reported this morning:
Starbucks' European division paid $175m in dividends to its US parent company last year, despite recording a 99 per cent fall in pre-tax profit as it spent heavily on developing more takeaway and drive-through services.
The company revealed in the latest accounts for its UK and European business that pre-tax profit fell from $99.5m in 2018, to $600,000 in 2019, as it incurred costs restructuring its operations, closing underperforming stores and investing in new formats. Its UK subsidiary reported a loss of £6.6m because of “difficult conditions on the UK high street”, it said.
And as I noted in the same article:
“What these accounts tell us is that there is still remarkably little [we know] about how Starbucks is making profits,” said economist and tax campaigner Richard Murphy. He said that while there was no evidence of tax avoidance there was a “strong tax motivation” in the way Starbucks managed its finances. He suggested the company publish “country by country accounts”.
In response Starbucks was noted as saying that it is “in the process of simplifying its accounts”.
But as I told the FT, that's not what we are asking for. If complexity is necessary, so be it. That's a commercial decision for Starbucks. What we are asking for is a simple statement of account - which Starbucks already prepares for tax purposes - that show, in total and on a country consolidated basis, what sales it makes, what profit it makes, and what tax it provides for and pays in each country where it operates. Add in data on county investment and on employment and the information required to appraise whether or not both profits and tax are likely to be fairly stated by country.
Starbucks knows what is required. They're choosing not to do it. And as a result I still do not trust its accounting.
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“Starbucks knows what is required.”
They are required to file a tax return to HMRC and I am sure they have done so. HMRC tax experts (who keep up to date with things like the rate of capital allowances and how to tax dividends) will then examine the tax return. Starbucks will do the same in each country they operate.
Whether you trust their accounts or not is wholly irrelevant. It is the opinion of HMRC and other tax authorities that matters.
With respect, almost no investor would agree with you
And nor do millions of others
That’s why we have accounts
Same old story, hopefully we can shame them into declaring the details. I’d boycott it , but their coffee is awful anyway so I never buy it….should be called Starsucks.
+1 on naming the sin here which has having a strong tax motivation. Is it possible for some people in the Tax Justice community to establish a committee to assign strength of tax motivation rankings to companies, and disallow government work and planning permission to those above a 4 say. I know this could lead to unintended consequences such as companies clustering around 3.9 say, but the goalposts can be moved based on feeling at a later date.
Tax to central gov’t is over 3/10ths of everything we do, so there is always going to be a high tax motivation. And with tax to the centre only going to be higher in the future, then a system of restraint needs bringing in. It’s possible that formal taxation won’t rise much of course, and that inflation will substitute, in which case companies engaging in inflation avoidance need to be called out.
Regards
Gordon
I admit that this is not now my area
I’d ask Tax Justice UK
Stupid question, but why aren’t such dividends taxed? Wouldn’t that solve most of the problem?
It is assumed the profits they were paid from were taxed in the originating company
That need not be true, of course
Why don’t you set an example by publishing full accounts for Tax Research UK, the Corporate Accountability Network, how much tax they pay and then your own personal tax returns, as LLPs are transparent to tax?
Only with all that data would we be able to know if you and your businesses are paying the fair and correct amount of tax. And if you are not willing to make all that data available publicly, why should Starbucks?
The TRLLP accounts are always published in full
CAN will do likewise, in excess of legal requirement, very soon, after board approval
But I do not publish my tax returned I ask no one else to do so, Starbucks included
LLP’s are transparent for tax purposes.
This means, for your readers in simple terms, that it is the partners that pay the taxes resulting from the business dealings of the LLP. Not the LLP itself.
So without knowing how much tax the partners of TRLLP paid, we have no way of knowing if the correct amount of tax was paid. So the structure you are using is totally opaque.
For example. it looks like TRLLP received a lot of charitable grants. In some circumstances those are taxable, and in others they are not. But we have no way of knowing, because the tax paid (or not) is hidden from view in your personal tax returns.
So if you want to set an example for Starbucks and others to follow on the subject of transparency, you should be totally transparent yourself. Surely you have nothing to hide, so why not?
I have always made clear all the grants are treated as taxable
But I am being consistent: I have opposed demands from some in tax justice returns to be made public
I was quite unpopular for doing so
I am not asking for those with unlimited liability to disclose
And I am not disclosing my return
Which is completely consistent
Meaning of course that there is opacity surrounding your tax affairs.
Not a good look for a tax campaigner. For it is not whether you are asking others to publish their tax returns but why you are hiding your own that will raise questions of credibility.
But I do not as, others to publish their tax returns
I ask limited liability entities to explain their tax as the price of the limited liability they enjoy
So you are wrong in every way
I wonder why?!
Maybe the moral high ground might be a bit shaky!
LLP stands for limited liability partnership.
So, to start with, within the partnership you enjoy limited liability. In your own words:
“I ask limited liability entities to explain their tax as the price of the limited liability they enjoy”
As it is, the tax paid on your grants is totally opaque and we have only your word that you have treated all those grants as taxable. Your word is no better than anyone else’s, so why should we believe you are more honest than Starbucks, for example?
I also notice that the partnership (for there has to be more than one person in a partnership) includes someone who I assume is your wife. Though it seems like you are the only active partner in the LLP, and from one of your posts yesterday (when you say you are effectively a sole parent) it would seem that the partnership in the LLP is a sham, and you are using her as a partner simply so you can be an LLP rather than a Ltd company.
Which makes me wonder why you are doing such a thing. If you are not gaining any advantage from being an LLP over an Ltd, one wonders why you set it up that way – other than the obvious reason, which is to benefit from the tax treatment of charitable grants. I also wonder if you realise that you should have by law disclosed this to Companies House and become a sole trader business, or transferred the LLP into a new Ltd company.
With all this, is it not easy to see why people are suspicious of you and your business practices. It is clear there are some very grey and some totally opaque areas of your own business, which are comparable to the opaque nature of Starbucks. If you are going to make a point of criticizing them, it would probably be better to be totally transparent on your own affairs first.
Of course, you can easily achieve this. It would not take much effort for you to publish your tax returns here which would end any speculation.
I have addressed this point in full already and will not be doing so again
I have not and never will, for example, ask Big 4 partners to publish their returns and have ever done so for anyone else
So I am utterly consistent
And every penny declared by TR LLP goes onto my tax return
Is it only Starbucks who needs to do this? How about Costa or Caffe Nero?
(If I was feeling churlish, I would if LLPs should be required to explain the tax payable on their income and gains as the price of the limited liability they enjoy, but I think taxpayers are entitled to confidentiality beyond what the law requires them to disclose. If you want public country by country reporting then campaign for that, but it is unfair to pick out specific taxpayers and require them to comply with your demands.)
I am personally liable for the tax of Tax Research LLP
I have no limited liability for that tax
I admit I would have thought you’d understand that
It’s little bizarre that you don’t
And as I have said two others who have trolled on this point, I ma not asking for anyone to out their personal tax return on file
Are you saying the partner in an LLP are different from anyone else even though they have unlimited liability for their tax?
If so, you need to refresh your awareness of what an LLP is
And. I am not picking out specific taxpayers with different demands: I am making entirely consistent demands
Again, I thought better of you
So far the only issue raised is whether I pay tax on a grant: I said I do and put that fact in the accounts when it was an issue
And that’s it
Perhaps it would assist those asking questions about your tax arrangements if you could tell them what role your wife plays in the business to justify her inclusion as a partner ?
Easy
We talk frequently on policy issues and discuss what might be tweeted and commented upon often, and have always done so. We last did so for 30 minutes last night
She tweets regularly as Drjawalsh. If you want opinion, you will find it there
We agreed the profit ratio years ago and have not changed it through many changes in life
What else does she do? I discuss all contracts, and policy decisions with her as I would with a non-exec Director
She more than earns her 1%
And she most definitely is a partner in this even if we no longer live together
For all of that influence and assistance, surely a solitary 1% share is a fairly derisory share of the partnership spoils ?
I guess it’s really none of our business, but to be honest, I am a little surprised at you Richard as i imagined you to be more equitable than that ?
Over the years it’s something we’ve agreed as part of a much bigger package of negotiation which I am certainly not sharing here
So having a “strong tax motivation” is the new crime. I wonder how strong a motivation it is compared to, say, arranging your income as tax free grants for political activism?
I have never taken a tax free grant
You should not believe all Tim Worstall says
118% of it is wrong
Hahahaha! I knew when I saw the words ‘tax’ and a big company – in this case ‘Starbucks’ – in the title I would be treated to a whole host of ‘concerned citizens’ declaring how unfairly you are treating poor wee diddums Big Company* (insert choice of big company that most people actually despise despite continuing to use it).
Remarkable.
I think you enjoy the challenge though 😉
You could grade the level of trolling – I still think Amazon had the most hysterical, they were excellent, it must cost them a fortune. Also, I wonder if the ‘level’ of trolling reflects the degree to which a company’s opacity is covering up tax-dodging? That would be an interesting algorithm.
Interesting angle on this trolling: ‘thou must be without sin before discussing the sins of others,,,’ and they want proof, otherwise your ability to evaluate a large company’s tax declaration methods could, surely, have no merit,,, I’m struggling to find the logic,,,
The logic is to be abusive
It is not to be rational
Nor to be constructive
The aim is to destructive for its own sake
The goal is to destroy whatever is of worth
It is the logic of Cummings
I also note this, sent by a friend overnight:
“Hi Richard,
I hadn’t looked up Tim Worstall for a long, long time until today. Now I wish I hadn’t. The comments on Brexit-related posts are appalling. Not merely ideological but racist. Anyone who shows the smallest hint of trying to understand an issue in the round is immediately jumped on. Clearly, it’s not the unhinged on social media we need to be worried about, but stuff like this. And no moderation whatsoever from Worstall.“
[…] is why I also called for it for Starbucks this […]
Tim Worstall has a whole section on you “ragging on Richie” he calls it..he rarely wants to discuss issues more he wants to parody you “spud” etc.. you should get him shut down. Was Worstall behind the Murphy Richards twitter thing?
I often wonder how anyone can dedicate so mc uh of his life to someone he has never met
I consider him to be rather sad
I suspect he was behind the parody account
Bit no one, and I mean literally no one, takes him seriously barring the far right and that he makes fools of them is fine by me