Starbucks admits “trust” issues as brand suffers

Starbucks is to review its UK tax arrangements in a bid to “maintain and build public trust” as fresh data shows the health of the coffee shop’s brand has continued to plummet following October allegations it had avoided paying corporation tax.

Starbucks

In a statement the company admitted its reputation had been damaged following revelations it had only paid £8.5m in corporation tax since it started trading in the UK in 1998 and is currently in discussions with HMRC and The Treasury.

“We have listened to feedback from our customers and employees, and understand that to maintain and further build public trust we need to do more. As part of this we are looking at our tax approach in the UK.”

The statement comes as YouGov BrandIndex data finds several key brand metrics in freefall. Its Buzz score, a net balance of negative and positive comments consumers have heard about a brand – fell to -19.2 on Friday (30 November) from 0.5 two months ago, before reports of its tax arrangements broke.

Its Index ranking – a net average of how customers rate the brand in terms of impression, quality, value, reputation, satisfaction and whether they would recommend it – fell to -9.6 from -0.4 over the same period.

Starbucks’ statement comes as a report by a group of MPs into corporation tax has called on HMRC to be more “aggressive and assertive in confronting corporate tax avoidance”.

The Public Accounts Committee took evidence from Starbucks, Google and Amazon executives in November after allegations all three had minimised their UK tax bills. The Committee’s chair Margaret Hodge says global firms that pay little or no tax are an “insult”.

Perception of Google and Amazon’s brand has also suffered but not has dramatically. The search giant’s Buzz dipped to 10.8 Friday, from 16.6 at the beginning of October. Amazon’s rating fell to 17.1 from 26.1.

Amazon says it pays what it is required to wherever it operates. “Amazon EU serves tens of millions of customers and sellers throughout Europe from multiple consumer websites, in a number of languages, dispatching products to all 27 countries in the EU”, it adds.

In his Autumn statement later this week, Chancellor George Osborne is expected to announce £154m in funding to target tax avoidance and evasion. Additional investigators will be taken on to probe global firms using legal loopholes to move profit earned in the UK outside.

HMRC says it “relentlessly challenges those that persist in avoiding tax”.

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