Tax: Starbucks in talks with UK's Revenue and Customs - BBC News

2 December 2012 Last updated at 13:16 ET

Global coffee chain Starbucks has said it is in talks with HM Revenue and Customs and the Treasury over how much UK tax it pays.

It is one of several well-known firms that were criticised over the level of their corporation tax payments.

The firm admitted that it "needed to do more" in the UK on tax.

Meanwhile, Chancellor George Osborne has pledged more funds for the British authorities to tackle tax avoidance by multinationals.

He told the BBC that an announcement would be made on Monday about the "extra investment in the part of the Inland Revenue that tackles tax avoidance by multinational companies".

A Public Accounts Committee report on the topic of how much tax multinational firms pay in the UK is due on Monday.

In November the committee took evidence from executives from Starbucks, Google and Amazon over the amount of tax the companies have paid in the UK.

'Competitive'

"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," said a Starbucks statement.

"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."

Starbucks, which has more than 700 outlets across the UK, said more details would be released later this week.

BBC business correspondent Theo Leggett said the coffee company reported sales of nearly £400m in the UK last year, but paid no corporation tax at all.

"Much of the money it earns in this country is transferred to a sister company in the Netherlands in the form of royalty payments, leaving the UK division to report regular annual losses," he added.

Mr Osborne did not single out any firms while making his announcement on the Andrew Marr Show.

He also said that as well as his extra funding for the UK authorities, it was also necessary to work at an international level on the issue.

"It is actually Britain who has been working with Germany and France to get those rules on the international table," he said.

But he also warned against "pricing Britain out of the world economy", adding that "if we make our taxes less competitive that will just mean more companies stay out of Britain".

Campaign group UK Uncut said Starbucks' announcement was "a blatant admission of guilt" that it had intentionally avoided tax.

Spokeswoman Jane Harvey said: "The government's next step must be to close the loopholes that Starbucks and other companies use to avoid paying billions in tax to the UK, instead of targeting single mums and disabled people through slashing public services, the welfare state and privatising the NHS."

Monday's PAC report is expected to be critical of the current way in which multinational firms used UK tax legislation.

After last month's hearings, PAC chair Margaret Hodge MP said: "One of our concerns is that the ability of global companies to choose where they put their costs and their profits gives them an unfair tax advantage that damages UK-based businesses,"