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.