Starbucks left with 'no choice' over tax avoidance issue

The multinational company has admitted it ‘needed to do more’ around accounting practices which reduce its taxable profits following Government and public pressure.

Mike Morgan, CEO, Red Consultancy, said that after widespread coverage ‘it would have been impossible’ for the company not to respond.

He said: ‘It had to move on the story in some way so this was inevitable. It couldn’t just dismiss this issue as it has taken a real beating on it – it had no choice.’

Morgan said that as well as an attempt to draw in money for the Government, this harder stance represented part of a ‘new world of transparency'.

He added: ‘It’s impacted on MPs and the media, and now companies are seeing it too. If the climate has prompted the Chancellor to act on it we know this is going to run and run and will get bigger all the time – it’s a hot issue.'

MD for corporate and public affairs at Ketchum Jo-ann Robertson praised the move, adding that it needed to be followed by action.

‘There’s strong evidence showing that the public demands a closer alignment between what companies say and what they do, and Starbucks needs to keep this in mind. It was right to respond in the way it has, but needs to show it is righting a wrong through keeping an open dialogue with the Government and showing demonstrable action.’

Robertson warned that other corporations needed to follow Starbucks' lead.

'At the moment companies will only see small impact on their reputations, but if they let these things continue it could lead to a real reputational mess for them,’ she said.

The Commons report accused HMRC of being ‘way too lenient’ with giant global corporations, while Chancellor George Osborne has pledged more than £150m for HMRC teams that tackle tax avoidance.

This comes as part of an overall £10bn clampdown led by Osborne.

This article was first published on prweek.com