By . Matt Chorley and Becky Barrow . PUBLISHED: . 19:44 EST, 25 April 2013 . | . UPDATED: . 07:08 EST, 26 April 2013 . The row over the tax status of coffee chain Starbucks reignited today, as the firm's tax advisers insisted the global firm made no profit in the UK. Bill Dodwell, head of tax policy at Deloitte, took to the airwaves to defend companies who use loopholes to avoid paying money to the Treasury. He claimed he was 'slightly mystified' that Starbucks had agreed to pay £20million in tax voluntarily after a public boycott over revelations it had paid no corporation tax since 2009. Bill Dodwell from Deloitte, which advises Starbucks on its tax affairs, defended the coffee chain from claims it used elaborate internal charges to cut its UK tax bill . The row came as a damning report by MPs said Britain's biggest accountancy firms have . ‘an unhealthily cosy relationship with Government’. Staff from private firms were seconded to work in the Treasury and HM Revenue and Customs, then used their insider knowledge to advise clients on how to avoid tax, it was claimed. The Public Accounts Committee said that . 'much' of the profit made every year by the 'Big Four' accountancy firms . - Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers - comes . from 'minimizing the tax paid' by their wealthy clients. Margaret Hodge, the Labour chairman of the committee, accused Starbucks of using elaborate charging structures to 'get the money out' of the UK and reduce their tax bill. One arm of the firm in Switzerland charged a 20 per cent mark up on coffee beans while a Dutch subsidiary charged the UK business to use the Starbucks brand, she said. She told BBC Radio 4: 'This is a company that for 15 years filed accounts in Companies House saying they were making a loss. 'They were saying one thing here to the Companies House, they were saying another thing to their shareholders and they promoted the guy who was in charge of this because he was so good.' But during intense exchanges on the Today programme, Mr Dodwell repeatedly defended the company. Margaret Hodge said accountants knew about tax loopholes . Asked if he believed that Starbucks . was making no profit in the UK, Mr Dodwell replied: ‘Yes. Vince Cable . thinks that and he spent time looking at it.’ He added: ‘Vince Cable, the Business . Secretary, looked at it with his officials and he told us he thought the . company did not make a profit in the UK. I'm prepared to take his view . on that.’ Mr Dodwell said: ‘There is a complete . disconnect between people who think that maybe a company should be . making gigantic profits and then they walk past a shut-down HMV or . Blockbuster because the retail environment in the UK is difficult.’ Starbucks' ability to pay no . corporation tax in the UK was not due to transfer pricing arrangements . which allow companies to shift profits into low-tax jurisdictions, he . said. ‘It is not because they have a . transfer pricing mechanism,’ he said. ‘They are losing money in the UK . because their rents are much higher than some of their competitors and . their staff costs are high.’ And MPs slammed the firms’ practice of parachuting their tax experts into government departments to provide tax advice. This creates a ‘ridiculous conflict of interest,’ the committee said, because it allows the accountants to gain ‘inside knowledge’ of the tax system which they then use to help big companies avoid paying tax in the UK - leaving the taxpayer millions of pounds worse off. Margaret Hodge, the Labour MP and chairman of the influential committee, said the way the firms operated had created a generation of ‘poacher-turned gamekeeper’ accountants with ‘inside knowledge’ of tax loopholes. She said: ‘When those staff return to their firms, they have the very inside knowledge and insight to be able to identify loopholes in the new legislation. ‘[They can] advise their clients on how to take advantage of them. ‘The poacher turned gamekeeper for a time returns to poaching.’ The report, published today, said it is ‘inappropriate’ for tax experts from accountancy giants ‘to advise on tax law and then devise ways to avoid the tax.’ Mrs Hodge said these controversial secondments into the Treasury and HM Revenue and Customs should be ‘banned’ in a new code of conduct for tax advisers. Tax bosses from the Big Four insisted the expertise that they provide is not sinister in the way that the report suggests . The PAC report comes amid a growing furore over the widespread tax avoidance by big companies in Britain, with some paying not a single penny in corporation tax. Earlier this month [apr], the energy firm nPower admitted it has not paid UK corporation tax for three years despite making £766million in profits. Amazon, Google and Starbucks have also come under fire for making millions in Britain while contributing little to the Treasury’s coffers. Yesterday the accountancy firms insisted the number of staff seconded into the Treasury or HMRC is tiny. PWC said it sends just two a year, while it is understood that Deloitte sends just one. Ernst & Young said it has had one person on secondment to HMRC over the last three years. The report says a ‘substantial’ part of the Big Four’s revenue comes from tax advice, equal to an average of around 22 per cent of their total UK turnover. It highlights how HM Revenue and Customs is waging a David and Goliath type battle with the accountancy firms due to the key Government department’s ‘limited’ resources. HMRC employs around 65 tax specialists who are experts in how multinational companies operate the payments between their overseas divisions, while they have around 250. Yesterday tax bosses from the Big Four insisted the expertise that they provide is not sinister in the way that the report suggests. Bill Dodwell, head of tax policy at Deloitte, said: ‘We have responded to requests for secondees and have provided a small number of people with some tax experience to help the Treasury and HMRC teams working on policy initiatives. ‘Our secondees have all reported to experienced Treasury and HMRC officials and have never driven any policy initiative. ‘We do not believe that there has ever been any conflict of interest but would want to help ensure that there is no perception of conflict.’ Kevin Nicholson, head of tax at PwC, said: ‘We strongly disagree with the PAC’s conclusions about the role of large accountancy firms which seem to be based on a misunderstanding both of what we do and how we do it. ‘We operate under a clear code of conduct, professional guidelines, and work constructively with HMRC. ‘We provide technical insight to Government but only when asked and are never involved in deciding tax policy which is a matter for the Government.’ A Treasury spokesman said: ‘The suggestion that Government shouldn’t work with business and indeed anyone affected by its policies is totally absurd.’
Bill Dodwell insists coffee chain is making no money in Britain .
Coffee chain has paid no corporation tax in the UK since 2009 .
MPs say accountants have 'inside knowledge' of tax loopholes .
By . Matt Chorley and Becky Barrow . PUBLISHED: . 19:44 EST, 25 April 2013 . | . UPDATED: . 07:08 EST, 26 April 2013 . The row over the tax status of coffee chain Starbucks reignited today, as the firm's tax advisers insisted the global firm made no profit in the UK. Bill Dodwell, head of tax policy at Deloitte, took to the airwaves to defend companies who use loopholes to avoid paying money to the Treasury. He claimed he was 'slightly mystified' that Starbucks had agreed to pay £20million in tax voluntarily after a public boycott over revelations it had paid no corporation tax since 2009. Bill Dodwell from Deloitte, which advises Starbucks on its tax affairs, defended the coffee chain from claims it used elaborate internal charges to cut its UK tax bill . The row came as a damning report by MPs said Britain's biggest accountancy firms have . ‘an unhealthily cosy relationship with Government’. Staff from private firms were seconded to work in the Treasury and HM Revenue and Customs, then used their insider knowledge to advise clients on how to avoid tax, it was claimed. The Public Accounts Committee said that . 'much' of the profit made every year by the 'Big Four' accountancy firms . - Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers - comes . from 'minimizing the tax paid' by their wealthy clients. Margaret Hodge, the Labour chairman of the committee, accused Starbucks of using elaborate charging structures to 'get the money out' of the UK and reduce their tax bill. One arm of the firm in Switzerland charged a 20 per cent mark up on coffee beans while a Dutch subsidiary charged the UK business to use the Starbucks brand, she said. She told BBC Radio 4: 'This is a company that for 15 years filed accounts in Companies House saying they were making a loss. 'They were saying one thing here to the Companies House, they were saying another thing to their shareholders and they promoted the guy who was in charge of this because he was so good.' But during intense exchanges on the Today programme, Mr Dodwell repeatedly defended the company. Margaret Hodge said accountants knew about tax loopholes . Asked if he believed that Starbucks . was making no profit in the UK, Mr Dodwell replied: ‘Yes. Vince Cable . thinks that and he spent time looking at it.’ He added: ‘Vince Cable, the Business . Secretary, looked at it with his officials and he told us he thought the . company did not make a profit in the UK. I'm prepared to take his view . on that.’ Mr Dodwell said: ‘There is a complete . disconnect between people who think that maybe a company should be . making gigantic profits and then they walk past a shut-down HMV or . Blockbuster because the retail environment in the UK is difficult.’ Starbucks' ability to pay no . corporation tax in the UK was not due to transfer pricing arrangements . which allow companies to shift profits into low-tax jurisdictions, he . said. ‘It is not because they have a . transfer pricing mechanism,’ he said. ‘They are losing money in the UK . because their rents are much higher than some of their competitors and . their staff costs are high.’ And MPs slammed the firms’ practice of parachuting their tax experts into government departments to provide tax advice. This creates a ‘ridiculous conflict of interest,’ the committee said, because it allows the accountants to gain ‘inside knowledge’ of the tax system which they then use to help big companies avoid paying tax in the UK - leaving the taxpayer millions of pounds worse off. Margaret Hodge, the Labour MP and chairman of the influential committee, said the way the firms operated had created a generation of ‘poacher-turned gamekeeper’ accountants with ‘inside knowledge’ of tax loopholes. She said: ‘When those staff return to their firms, they have the very inside knowledge and insight to be able to identify loopholes in the new legislation. ‘[They can] advise their clients on how to take advantage of them. ‘The poacher turned gamekeeper for a time returns to poaching.’ The report, published today, said it is ‘inappropriate’ for tax experts from accountancy giants ‘to advise on tax law and then devise ways to avoid the tax.’ Mrs Hodge said these controversial secondments into the Treasury and HM Revenue and Customs should be ‘banned’ in a new code of conduct for tax advisers. Tax bosses from the Big Four insisted the expertise that they provide is not sinister in the way that the report suggests . The PAC report comes amid a growing furore over the widespread tax avoidance by big companies in Britain, with some paying not a single penny in corporation tax. Earlier this month [apr], the energy firm nPower admitted it has not paid UK corporation tax for three years despite making £766million in profits. Amazon, Google and Starbucks have also come under fire for making millions in Britain while contributing little to the Treasury’s coffers. Yesterday the accountancy firms insisted the number of staff seconded into the Treasury or HMRC is tiny. PWC said it sends just two a year, while it is understood that Deloitte sends just one. Ernst & Young said it has had one person on secondment to HMRC over the last three years. The report says a ‘substantial’ part of the Big Four’s revenue comes from tax advice, equal to an average of around 22 per cent of their total UK turnover. It highlights how HM Revenue and Customs is waging a David and Goliath type battle with the accountancy firms due to the key Government department’s ‘limited’ resources. HMRC employs around 65 tax specialists who are experts in how multinational companies operate the payments between their overseas divisions, while they have around 250. Yesterday tax bosses from the Big Four insisted the expertise that they provide is not sinister in the way that the report suggests. Bill Dodwell, head of tax policy at Deloitte, said: ‘We have responded to requests for secondees and have provided a small number of people with some tax experience to help the Treasury and HMRC teams working on policy initiatives. ‘Our secondees have all reported to experienced Treasury and HMRC officials and have never driven any policy initiative. ‘We do not believe that there has ever been any conflict of interest but would want to help ensure that there is no perception of conflict.’ Kevin Nicholson, head of tax at PwC, said: ‘We strongly disagree with the PAC’s conclusions about the role of large accountancy firms which seem to be based on a misunderstanding both of what we do and how we do it. ‘We operate under a clear code of conduct, professional guidelines, and work constructively with HMRC. ‘We provide technical insight to Government but only when asked and are never involved in deciding tax policy which is a matter for the Government.’ A Treasury spokesman said: ‘The suggestion that Government shouldn’t work with business and indeed anyone affected by its policies is totally absurd.’
corporation tax since 2009. Bill Dodwell from ability to pay no . corporation tax in the UK was accountants with ‘inside knowledge’ of tax for making millions in Britain while contributing