snowychap Posted November 7, 2012 Share Posted November 7, 2012 Because if you look at the Starbucks UK accounts, you'll see that on sales of £400m, the company lost £4m. And that loss is BEFORE any transfer pricing arrangements, such as the royalty and interest charges. What about the cost of the raw mats? Link to comment Share on other sites More sharing options...
CarewsEyebrowDesigner Posted November 7, 2012 Share Posted November 7, 2012 You know what is fascinating about John Prescott? Nothing. 1 Link to comment Share on other sites More sharing options...
peterms Posted November 7, 2012 Share Posted November 7, 2012 Because if you look at the Starbucks UK accounts, you'll see that on sales of £400m, the company lost £4m. And that loss is BEFORE any transfer pricing arrangements, such as the royalty and interest charges. The reality is that Starbucks grew too quickly in the UK and it entered stupid bidding wars with other chains, eg Coffee Republic and Costa for expensive retail units in prime locations. You need to look behind headlines from people like UK Uncut and that idiot Richard Murphy and analyse the actual facts. You'll find this goes back to 1998. As well as charging royalties for who knows what (at a rate previously challenged by HMRC but now agreed in one of Dave Hartnett's sweetheart deals) they borrow money from another part of Starbucks at a higher rate of interest than Starbucks itself borrows at, instead of Starbucks investing in these units. It is an accounting device to move money to a lower tax jurisdiction. The money is used to fund expansion, and when each store opens, a charge of 25k euro is payable on top of the royalty. Supplies are purchased from other parts of Starbucks at rates which are designed to make accounting losses and shift money to lower tax jurisdictions. And "services". Alstead said the unit also paid other group companies for unspecified services, including a Swiss-based associate he declined to identify. (Reuters). As a consequence of these accounting devices, Starbucks told investors its European businesses made a $40 million profit in 2011, but accounts filed for its UK, German, and French units, which make up 90 percent of European revenues, showed a loss of $60 million. (same source). So 90% of the business lost $60m, and the remaining 10% made £100m profit. Right. It is no more than accounting presentation in order to disguise profits and move money away from where it has been made to somewhere that less tax is payable. I believe the usual defence is a variant of "It's not illegal". It's novel to see someone buy the company line that these are real losses. But it doesn't seem to convince Reuters, or the FT, or the Public Affairs Committee, or the German government. Nor does it convince UK Uncut or Richard Murphy. Link to comment Share on other sites More sharing options...
villaajax Posted November 8, 2012 Share Posted November 8, 2012 Perhaps this is why Apple pay nearly no tax? I didn't realise the country was run on an iPad. Link to comment Share on other sites More sharing options...
RunRickyRun Posted November 8, 2012 Share Posted November 8, 2012 Stuff David Cameron Forgot to Say "I'll make it harder for the police to use DNA evidence to catch criminals" "I'll make it harder for communities to install CCTV" I think they're excellent policies tbh Link to comment Share on other sites More sharing options...
peterms Posted November 8, 2012 Share Posted November 8, 2012 Perhaps this is why Apple pay nearly no tax? I didn't realise the country was run on an iPad. It's just cover for him playing Fruit Ninja. When he thinks anyone's watching, he'll switch to this. Bit like reading a porn mag held inside a copy of the Telegraph. Link to comment Share on other sites More sharing options...
tonyh29 Posted November 8, 2012 Share Posted November 8, 2012 Perhaps this is why Apple pay nearly no tax? I didn't realise the country was run on an iPad. I know the article is dated today but I read about that app months ago do news agencies just recycle old news between themselves , perhaps tomorrow The Mail will run an article of John Prescott punching a heckler Link to comment Share on other sites More sharing options...
tonyh29 Posted November 8, 2012 Share Posted November 8, 2012 "I'll make it harder for the police to use DNA evidence to catch criminals" "I'll make it harder for communities to install CCTV" I think they're excellent policies tbh the making it harder bit ..or the actual policy ? Link to comment Share on other sites More sharing options...
Risso Posted November 8, 2012 Share Posted November 8, 2012 You'll find this goes back to 1998. As well as charging royalties for who knows what (at a rate previously challenged by HMRC but now agreed in one of Dave Hartnett's sweetheart deals) they borrow money from another part of Starbucks at a higher rate of interest than Starbucks itself borrows at, instead of Starbucks investing in these units. It is an accounting device to move money to a lower tax jurisdiction. The money is used to fund expansion, and when each store opens, a charge of 25k euro is payable on top of the royalty. Supplies are purchased from other parts of Starbucks at rates which are designed to make accounting losses and shift money to lower tax jurisdictions. And "services". (Reuters). As a consequence of these accounting devices, (same source). So 90% of the business lost $60m, and the remaining 10% made £100m profit. Right. It is no more than accounting presentation in order to disguise profits and move money away from where it has been made to somewhere that less tax is payable. I believe the usual defence is a variant of "It's not illegal". It's novel to see someone buy the company line that these are real losses. But it doesn't seem to convince Reuters, or the FT, or the Public Affairs Committee, or the German government. Nor does it convince UK Uncut or Richard Murphy. You just don't seem to have a very good grasp of basic accounting. "What a company tell its investors" isn't a basis for anything really, other than possible action by its investors if they think they've been lied to I suppose, but anyway. The fact is that the audited accounts (on which any tax or lack of would show that on £400m sales, they made a loss of £32m, and even if you add back in the £25m group royalty fees, and £2m group interest, they'd STILL have made a loss. And that was the case last year as well. The fact is, and I know you're aware of this, private houselholds aren't spending money, so you'd expect a company providing a "luxury" product (if you can call a £3 cup of frothy milk with a hint of coffee a luxury) are going to struggle. Especially when that company entered into lots of very expensive lease agreements on prime London property when it entered into a bidding war against the likes of Costa and Coffee Republic when times were better. The fact is it just doesn't sell enough coffee, and as the transfer pricing arrangments seem to be a set percentage, the inference is that if they did sell more, they'd make a profit and pay tax. The accounts show that Starbucks paid £123m wages and £60m rent last year, on 607 stores. Link to comment Share on other sites More sharing options...
RunRickyRun Posted November 8, 2012 Share Posted November 8, 2012 the making it harder bit ..or the actual policy ? The making it harder bit. I'm in full agreement with Dave on those two "quotes". Link to comment Share on other sites More sharing options...
peterms Posted November 8, 2012 Share Posted November 8, 2012 You just don't seem to have a very good grasp of basic accounting. "What a company tell its investors" isn't a basis for anything really, other than possible action by its investors if they think they've been lied to I suppose, but anyway. The fact is that the audited accounts (on which any tax or lack of would show that on £400m sales, they made a loss of £32m, and even if you add back in the £25m group royalty fees, and £2m group interest, they'd STILL have made a loss. And that was the case last year as well. The fact is, and I know you're aware of this, private houselholds aren't spending money, so you'd expect a company providing a "luxury" product (if you can call a £3 cup of frothy milk with a hint of coffee a luxury) are going to struggle. Especially when that company entered into lots of very expensive lease agreements on prime London property when it entered into a bidding war against the likes of Costa and Coffee Republic when times were better. The fact is it just doesn't sell enough coffee, and as the transfer pricing arrangments seem to be a set percentage, the inference is that if they did sell more, they'd make a profit and pay tax. The accounts show that Starbucks paid £123m wages and £60m rent last year, on 607 stores. I can't tell if this is attempted misdirection, or if you really don't get it. This is not to do with people drinking less coffee. It's not about last year's accounts. Since 1998, Starbucks UK have had sales of £3 billion. They have paid tax of £8.6 million. (Cue accountants squealing "You don't pay tax on turnover!"). They have achieved this because they have so arranged their affairs, via internally determined pricing mechanisms for purchases, loans, "royalties", that they appear to make a loss in many of those years. The accounts you are looking at are one example. You will understand that it is not the only year this has happened. Nor is it the only country it happens. Oddly, their French and German operations also seem to make a loss, every year for the last ten years. I agree that people are spending less, that Starbucks (like many others) have found their lease deals too expensive, and that their product is overpriced and not very good quality compared to many alternatives. But the point is their continuing accounting practices over the last fourteen years, and their ability, like so many other multinationals, to manipulate their company accounts in order to show an accounting loss. Of course if they really had been making the losses they claim, they would have been closing branches down, not opening more and more. But I think we all know that. Link to comment Share on other sites More sharing options...
Risso Posted November 8, 2012 Share Posted November 8, 2012 How can it "not be about last year's accounts"? That's one year, and the year before was the same, that showed a loss AFTER transfer pricing. I tell you what Peter, get your hands on their accounts and tell me how they've manipulated things. Otherwise it just looks like you're merely repeating UK Uncut type guff with no understanding. Tell me the facts, as I've attempted to do, not just "they haven't paid much tax". Link to comment Share on other sites More sharing options...
bickster Posted November 8, 2012 Author Moderator Share Posted November 8, 2012 But isn't the profit for Starbucks inc (not Starbucks uk) in the transfer pricing and this is where they have avoided tax. The company based in the uk makes a loss, so it doesn't pay tax. The global company makes the profit which doesn't even get touched by UK tax, even though the revenue is derived from UK business Link to comment Share on other sites More sharing options...
peterms Posted November 8, 2012 Share Posted November 8, 2012 How can it "not be about last year's accounts"? That's one year, and the year before was the same, that showed a loss AFTER transfer pricing. I tell you what Peter, get your hands on their accounts and tell me how they've manipulated things. Otherwise it just looks like you're merely repeating UK Uncut type guff with no understanding. Tell me the facts, as I've attempted to do, not just "they haven't paid much tax". Do you mean "showed a loss before transfer pricing"? As for me getting the accounts and trying to work out exactly where they have manipulated things, you're having a laugh, I take it. Reuters financial journos have spent some time doing this, asking direct questions to the company about several aspects of the accounts, and found that the information wasn't made available and the company refused to elucidate. The information is not there, that's the whole point. But the mechanisms are known: the charging of interest at LIBOR +4%; the charging of royalties by a vehicle based in a tax haven; and charging the UK operation for goods and services at prices designed to create a loss in the UK and a profit elsewhere. You appear to recognise the first two, perhaps because you can see them in the accounts, but not the third, presumably because it is not highlighted in the accounts. And I assume your repeated references to UK Uncut are intended to suggest that criticism of Starbucks and others comes only from activists who don't understand the issues. It's a sleight of hand, and it doesn't wash. The UK operation makes a profit, as its CFO has admitted in 2007, 2008, and 2009. Its international president has said he is very pleased with UK performance, and has cited it as an example for the US operation to follow. The presentation of the accounts to show a loss in the UK and a profit in a lower tax area is an accounting device, and you of all people should know this. But then, you do. Link to comment Share on other sites More sharing options...
peterms Posted November 8, 2012 Share Posted November 8, 2012 This could have been written for Risso. Richard Murphy draws attention to coverage of electoral fraud in the Isle of Man involving trusts and shady financial backers: Richard Murphy @RichardJMurphy Missed this until now: election fraud in the Isle of Man using anonymous trusts? Whatever next! ht.ly/f7ura Link to comment Share on other sites More sharing options...
tonyh29 Posted November 8, 2012 Share Posted November 8, 2012 This could have been written for Risso. Richard Murphy draws attention to coverage of electoral fraud in the Isle of Man involving trusts and shady financial backers: Richard Murphy @RichardJMurphy Missed this until now: election fraud in the Isle of Man using anonymous trusts? Whatever next! ht.ly/f7ura Is the Isle of Man Lib Dem or Conservative ? Link to comment Share on other sites More sharing options...
peterms Posted November 8, 2012 Share Posted November 8, 2012 Is the Isle of Man Lib Dem or Conservative ? "Independents"... Link to comment Share on other sites More sharing options...
RunRickyRun Posted November 8, 2012 Share Posted November 8, 2012 Just seen Neil and Christine Hamilton enter Burger King in Shirley. How the mighty have fallen! Link to comment Share on other sites More sharing options...
tonyh29 Posted November 8, 2012 Share Posted November 8, 2012 knowing them they probably left without paying for it as well Link to comment Share on other sites More sharing options...
RunRickyRun Posted November 8, 2012 Share Posted November 8, 2012 Judging by the suited and booted person who met them at the door, I'd imagine it was something to do with a naff reality tv series. Link to comment Share on other sites More sharing options...
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