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Tony Wickenden: What do Starbucks and Prince Charles have in common?


What have Starbucks and Prince Charles got in common? No, not frapuccinos or grandchildren – though, no doubt, some grandparents and grandchildren do visit Starbucks. Probably not that many Princes though. “Chris get many Princes in your Farringdon Bux? No? Thought not.”

There are two things in common that I know of.

The first is that the tax that they pay (or, more accurately the lack of it) has been a subject of interest and debate for “Witchfinder General” Margaret Hodge of the Public Accounts committee.

The second is that both pay tax voluntarily. Starbucks, following the “inquest” into their low (but apparently not illegal) effective rate of corporation tax. Prince Charles on account of the arcane tax position of the “private estate” that is the Duchy of Cornwall. Basically, the Duchy has no legal liability to pay tax (income tax , capital gains tax or corporation tax) as it is equated to the (tax exempt) Prince himself.

The Prince, however, voluntarily pays tax on income from the Duchy that is paid to him net of any deductions for allowable expenses eg private staff costs. So on the one hand , “well done Starbucks and Prince Charles”. On the other, shouldn’t the law be amended to ensure that the amount of tax thought to be reasonable , is actually paid ?

In the case of Starbucks , of course, a high degree of international co-operation would be necessary to achieve this objective and when national self interest is at play the outcome is likely to be anything but certain and quickly achieved. Subject to this very real practical challenge though , relying on voluntary payments seems all a bit too “discretionary” in this day and age doesn’t it?

Anyway, make mine a Grande(daddy) Taxachino.

OK, that’s pretty weak I agree. Add two extra shots.

Tony Wickenden is joint managing director at Technical Connection

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  1. A non-discretionary taxpayer 13th September 2013 at 11:21 am

    Ironically, it is Starbucks rather than Charles Windsor that is in the more defensible position. Although I agree that a co-ordinated review of transfer pricing is required in order to prevent such financial acrobatics. All things being equal, a business’ tax liabilities should equate to the profits made in that jurisdiction, and the artificial manipulations of copyrights etc should be prohibited.

    As for Charles Windsor, here is a man who pays his servants less than Starbucks and only pays enough tax to avoid public indignation. Margaret Hodge is actually doing a good job in shining a spotlight on his attempts to pretend that his business affairs are personal, although I suspect that the powers that be will ensure that the abuse of privilege continues.

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