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
Access full CPD, technical updates and business generation ideas through Techlink Professional. Go to www.techlink.co.uk and click the Contact Us link at the top of the screen and then request your free trial from the drop down menu.