Starbucks Agrees to Pay £20m Corporation Tax [VIDEO]

Starbucks has reached a deal with HMRC to hand over around £10m each year for the next two years in corporation tax, more than it has paid in total over the past decade.

The coffee chain, which has more than 700 stores in Britain, has been under pressure to increase the amount of tax it pays after it emerged that the company had handed over just £8.6m in corporation tax to HMRC since 1998, despite more than £3bn in UK sales.

"Having listened to customers and to the British public, Starbucks in the UK will be making changes which will result in the company paying higher corporation tax in the UK - above what is currently required by law," said UK Managing Director Kris Engskov.

"Specifically, in 2013 and 2014 Starbucks will not claim tax deductions for royalties or payments related to our intercompany charges."

MPs on the public accounts committee (PAC) branded Starbucks's tax affairs, and those of other corporate giants Google and Amazon, as "immoral".

"You're either running the business badly, or there's some fiddle going on," said Austin Mitchell MP, who sits on the PAC, when he was grilling Troy Alstead, Starbucks' chief financial officer.

Alstead defended his company's tax bill, saying Starbucks had made 13 years of losses in the UK.

However, Margaret Hodge MP, chairwoman of the PAC, accused Starbucks of "exporting" profits from the UK in an accounting trick to minimise tax.

Eventually the company caved in to public pressure and arranged a meeting with tax officials to thrash out a deal.

"We've always played by the rules. This is not about the rules. This is about what is the right thing to try and do given the circumstances within Europe," Howard Schultz, Starbucks chief executive, told Reuters after the company investor meeting in New York.

Campaigners such as UK Uncut, which rails against tax avoidance, have called for a boycott of Starbucks.

Their calls for the company to cough up more tax are intensified by public sector cutbacks under the government's austerity programme, which has seen welfare bill slashes and the closure of services, as well as an extended downturn for the British economy.

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