Starbucks at loggerheads with the taxman

by David Jetuah

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09 Aug 2010

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Coffee giant Starbucks is in a dispute with the taxman on the controversial issue of transfer pricing.

In a note to its annual British accounts for the year ending September 27, 2009, Starbucks said: "The company is in discussion with HM Revenue & Customs regarding its transfer pricing policy."

The way goods and services are paid for between subsidiaries of multinational companies has been a bone of contention for the taxman because of concerns the deals are not done at "arms length".

HMRC wants to preserve the UK's tax take by making sure these transfers have not been underpriced.

Starbucks said that if the taxman prevailed "the company believes it has sufficient unrecognised deferred tax assets that it could utilise" to pay the additional liabilities.

A Starbucks' spokesman told thisismoney.co.uk: "We are in discussions with HM Revenue & Customs regarding Starbucks' transfer pricing policy, which we believe to be reasonable."

Further reading:

Cross-border tax probes set to rise

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