A month ago I wrote this letter to HM Revenue & Customs.
I have just read an article on the Daily Telegraph website, “Starbucks opens negotiations with HMRC to start paying more UK tax” (1 December 2012).
I find this story most interesting, and would like to also “open negotiations” with yourselves over my own tax liability. Please can I apply to pay 2% tax on my income? I realise this is somewhat lower than the 20% I currently pay, but it is still quite a lot more than the 0.28% corporation tax that Starbucks have been paying according to that article (£8.5m on profits of £9bn). Also, this is of course a negotiation, so I thought I should start low!
Whilst writing, I should clarify that I do actually believe that people and companies who can afford it should pay a proper amount of tax, especially at this time of “austerity”, and that 2% of my salary isn’t a great deal of money. However, as the government is currently cutting benefits to those in society who don’t have very much, such as sick and disabled people and the unemployed, the taxes you are taking from me aren’t really helping the needy much anyway. Hence what I would prefer to do is pay a smaller amount of direct tax so that I can donate the difference to causes I personally believe in, such as the Trussell Trust which runs food banks for people on low incomes, Shelter for homeless people and the QEF Foundation for the disabled. I hope you agree that this makes sense?
I look forward to entering into negotiations with you as soon as possible, as I feel that getting more of my money to people in need is quite urgent, really.
Today I received this letter back from HMRC:
Thank you for your letter dated 2 December 2012.
I cannot comment on other individuals [sic] or companies [sic] tax situations. I enclose a [sic] HMRC briefing on the taxing of the profits of multinational business which you may find useful. [Hard copy attached of this PDF “Taxing the profits of multinational businesses” dated October 2012]
As an individual taxpayer who is taxed on his employment through Pay As You Earn you cannot negotiate the rate of tax you pay on your taxable income. The rate of income tax and the amount of your income that is taxable is agreed by the Chancellor of the Exchequer in the budget and applies to all UK individual taxpayers whether they are employed or self employed.
I have to say I was disappointed. Especially as my tax return is due in a few weeks.
In my opinion the briefing linked above is pretty waffly. It talks a lot about how important the location of the company is, to wit: “Having UK customers is not the same as having a branch in the UK”. Well, Starbucks do have branches in the UK – that’s the whole point. Also note this sentence: “Although an apparently low tax rate in a company’s accounts might indicate tax avoidance, it could also be the case that the business has acted entirely properly, by making use of specific tax reliefs and incentives designed, for example, to encourage capital investment or research and development.” That isn’t the case with Starbucks either. They’re not an engineering firm given tax incentives to develop some gadgetry for the benefit of mankind. The only research and development Starbucks are doing is seeing how many customers like to drink thin, tepid, brown water and pay for the pleasure.
Needless to say, I completely boycotted Starbucks the moment the news broke and to be honest always did my best to avoid them anyway precisely because of how dreadful their coffee is. There are plenty more options in the high street, such as Costa, or indeed your local independent coffee bar, who very likely charge less anyway.
7 thoughts on “No surprises… what the HMRC said when I asked if I could negotiate my personal tax liability”
The problem is most Starbucks shops are franchises, so by boycotting them you just drive genuine, tax-paying small British businesses under and you don’t really hurt Starbucks much. We should be lobbying the Chancellor to change the law, not picking on individual businesses, because they’re all at it, legally (albeit arguably immorally), and the law is at fault. Boycotting Starbucks has made Starbucks change its position, which allows us all to feel smug that we made a difference, but we didn’t really. Everyone else is still at it and the Chancellor has done nothing to close the loopholes Starbucks was and is exploiting, along with almost every other global company operating in the UK.
Not true. In response to queries during the furore over its tax bill, Starbucks admitted a scant handful of its outlets are franchises.
Most of these are at airports, where the airport company itself is the franchisee.
All Starbucks cafes you see on the high street are owned and run by Starbucks.
PS: ThoughtCat, I love your style 🙂
Thanks Catherine 🙂 And thank you too Greg – although whoever’s right I would still boycott them 😉
Well I may have been misled by Starbucks propaganda, I accept that – however the fundamental point remains – chasing individual businesses changes nothing. The law needs to change, the companies will *never* self-regulate. We’re going after the wrong people, albeit for all the right reasons. Don’t get me wrong, I think it’s pretty poor form by all these companies – it’s basically dishonest – but it’s *legal*. So George Osbourne is the person who should be feeling the heat!
Not true – I have worked for Starbucks in the past, and the vast majority of their UK branches are owned, rather than franchised. You can usually tell the difference because franchises often use cups that say ‘we proudly brew and serve Starbucks coffee’.
Perhaps it would help if you changed your name by deed poll to something like “Thoughtcat PLC”. I do have friends in other countries, perhaps I can borrow money from them to offset against my tax bill?
Brilliant idea! 🙂
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