Starbucks threat leaves a bad taste: Ministers and firm in war of words over tax - Mirror.co.uk

Coffee giant Starbucks received a fresh government roasting yesterday – before denying threats to freeze UK investments in the bitter tax row.

Tory chairman Grant Shapps fired the extra shot in the conflict reignited by David Cameron on the world stage.

He said: "I don't think we've ever singled out a single company but I think that companies in this country need to pay their way."

But Starbucks said the PM had done just that by urging big tax avoiders to "wake up and smell the coffee" at the World Economic Forum in Switzerland last Wednesday.

The US coffee firm's UK boss Kris Engskov met officials at No10 on Friday and it was later reported that Starbucks could put on hold plans to invest £100million in the UK, which was last night denied.

Starbucks said: "We remain fully committed to opening 300 new stores and creating 5,000 new jobs by 2016."

But, signalling the firm's anger with Mr Cameron, a source close to the firm earlier accused him of singling Starbucks out for "cheap shots".

The source added: "It should not be forgotten, the firm has pledged to pay tax now and in future."

Starbucks is one of the firms, along with Google and Amazon, accused by the Commons Public Accounts Committee of "immorally" minimising UK tax bills.

Individuals, including comedian Jimmy Carr, have also come under fire for using schemes to avoid tax.

The Committee heard last year Starbucks has paid just £8.6million in corporation tax in the UK in 14 years, despite sales of £3billion.

The coffee chain, with 700 UK outlets, has since said it would pay "a significant amount", thought to be £20million, during 2013 and 2014, regardless of profits.

Starbucks said its tax bill was low because it had only made a profit in one year since its arrival in Britain in 1998. But the Public Accounts Committee said it was "difficult to believe" when the company had 31% market share by turnover.

A complex system of international payments known as transfer pricing was being used to lower its tax bill.

Amazon will come under fresh pressure over its UK tax bill this week when the online retailer is expected to declare it made £5.7billion last year, with some £570million from the UK.

In 2011 Amazon had a UK turnover of £207million but paid just £1.8 million corporation tax.

Labour Treasury spokesman Chris Leslie said: "The responsibility is with the Chancellor to clamp down on tax loopholes."