HMRC ‘suggests’ consumers might like to boycott certain tax avoiding retailers
We’ve all heard about Starbucks by now. And Amazon, and Facebook and Google and IKEA- the list goes on. No-one is suggesting that these retailers are doing anything illegal, but they are paying less tax in the UK than they could do. Than some think they should do.
Of course, the retailers themselves argue that it would be ludicrous for them to pay extra tax that they don’t have to- after all that does not make good business sense. But in times of austerity where perhaps a number of us would rather pay less tax, but we don’t have the wealth and power not to, people power could be making a comeback.
UK Uncut is one such group trying to rally and assemble disgruntled members of the public, and its recent demonstration in London meant that some Starbucks branches had to be protected by the police force, the costs of which they had not contributed towards (or not much anyway). Business analysts reports are full of graphs detailing the steep drop in public support for the Starbucks brand after publication of the Reuters report that showed McDonalds as a more (tax) responsible company.
But is this all aimless chuntering? While commuters may complain about Starbucks’ behaviour, are they still getting their double toffee latte fix from their local branch on their way into work in the morning? Surely the only way to really express customer dissatisfaction with unsporting behaviour is to refuse to buy their products and hit them where it hurts.
And that is exactly what the Chair of HMRC, Lin Homer, has been ‘suggesting’ people do. Rather than amending the tax rules to prevent this kind of legal behaviour, she has told MPs that consumer choice could be ‘helpful’ in encouraging firms to pay more tax, and be more socially responsible.
"The field of corporate social responsibility is a relatively new area. We are beginning to see some evidence that taxpayer opinion is altering the behaviour of firms and individuals, and that's actually a helpful thing for HMRC,” she said, noting the irony pointed out by MPs that there is still £32billion in uncollected tax from big business outstanding from last year.
It seems HMRC is hoping that people power could do their job for them, as Ms Homer continued: “It may well be the pressure of public opinion will cause some companies to be more explicit than the annual accounts require them to be about their tax strategy. Do the people who invest in you and buy from you know about your tax strategy?”
Of course, tax law, particularly in respect of big business is a delicate balancing act, which is why the UK rate of corporation tax continues to fall despite our economic slump. If Starbucks were forced to pay UK tax, the argument goes, they would just pack up and leave, taking all those lovely jobs with them.
But is that really true? Would they really ignore the massive UK market over what essentially boils down to an additional operating cost?
And for once it seems that HMRC and UK Uncut are in agreement- if you, the consumer, decides not to buy coffee from a particular retailer, that particular retailer may just decide it would rather pay tax than lose its entire UK market.
So with HMRC claiming people power as more effective than their own rules, it seems corporate tax bills may, therefore, come down to how far the public can actually be bothered.