Starbucks Plays Down 'Threats' Over Tax Row

Starbucks is distancing itself from reports that it threatened to pull millions of pounds of investment out of the UK because of "cheap shots" from the Prime Minister over tax.

The company's UK managing director Kris Engskov demanded talks after David Cameron said tax-avoiding firms need to "wake up and smell the coffee", according to The Sunday Telegraph.

The Prime Minister's use of the phrase in a speech to the World Economic Forum in Davos was widely interpreted as a direct attack on Starbucks, which has faced criticism for not paying UK corporation tax.

A "source close to the firm" told the newspaper: "The PM is singling the business out for cheap shots, a company that, it should not be forgotten, has pledged to pay tax now and into the future."

The US coffee chain has faced criticism after it emerged that since its arrival in Britain in 1998, it has paid £8.5m in corporation tax, despite total sales of £3bn. 

It later agreed voluntarily to pay additional tax of at least £20m over the next two years.

Sources close to the business have reportedly said that plans announced last year to invest £100m in new UK branches could be put on hold, meaning fewer jobs will be created.

But in a statement, Starbucks said: "We had a very constructive meeting which was long-scheduled. We do not discuss the details of our government meetings but can say that we do not recognise how it has been reported.

"Starbucks agrees with the Prime Minister that all businesses should pay their fair share.

"In the UK, we employ 9,000 people, contribute £300m a year to the economy and are forgoing tax deductions that will make the Exchequer at least £20m better off."

Conservative Party chairman Grant Shapps told Sky News that the Government was not singling out any company for criticism.

He told Sky's Dermot Murnaghan: "I don't think we'd ever single out a single company but I do think that companies in this country need to pay their way and that applies to that company (Starbucks) and any other company you'd care to mention.

"It certainly applies to the millions of smaller businesses in this country, people who work very hard ... and are paying their fair share to taxes all the way through. The same rules have to apply to everyone."