Partner Article

Starbucks tax decision has set a dangerous precedent

Following the global coffee chain, Starbuck’s, decision to pay £10 million to the tax man over the next two years, Richard Jordan, partner and tax expert at Thomas Eggar LLP gave his views on the matter.

The increasing public pressure on companies such as Starbucks seems to be throwing taxes in to disarray. Starbucks is operating within the law, and has not done anything legally wrong but it has still committed to give the tax man £10 million over the next two years. Whether Starbucks is doing this as a PR move or not, it does not represent a reasonable way to pay taxes and sets a dangerous precedent.

The government’s answers to tackling tax avoidance is the new General Anti Avoidance Rule coming in next year but this does nothing more than question what the reasonable man thinks is reasonable, when it should be making it clear what counts as responsible tax planning and what is abusive tax avoidance. This is a scary proposition for tax professionals and highlights the future problems the profession is going to have with this. A change to the law would have had a clearer, wider and fairer impact.

Margaret Hodge continues to be gaining traction in her comments on tax professionals and I strongly believe we will be next on the agenda for unjustified scrutiny. Rather than alienating tax professionals, the Revenue could be working with us to help weed out those companies that aggressively avoid tax. Government engagement and discussion with sector representatives of the professional advisors (e.g. STEP/CIOT) would be far more fruitful than professional bashing in the press.

This was posted in Bdaily's Members' News section by Thomas Eggar .