Coffee shops are now vital to the economy


Starbucks is without doubt a Public Interest Entity in the UK.

Eh?

‘public-interest entities’ means: … Entities designated by Member States as public-interest entities, for instance undertakings that are of significant public relevance because of the nature of their business, their size or the number of their employees.”

£370 million turnover? 0.019% of GDP as turnover – note, turnover and GDP are not the same thing at all. 7,000 employees? 0.02% of labour force?

That’s what is required to be a PIE?

Twat.

As to this:

Richard Murphy, director of Tax Research, said: “The accounts offer no clear insight as to what is going on. And that is the problem. Starbucks still needs to put all their cards face up on the table in a spirit of transparency and openness and it is still not clear that they are.”

The P³ accountant, superhero, cannot work out what’s happening in a set of accounts?

There are numerous ambiguities in the accounts, including a reported £16 million transfer pricing adjustment that increases UK profits but which Starbucks says has nothing to do with tax, plus significant prior year tax adjustments meaning there is a current tax charge when a significant loss was made. Starbucks, I am told, say there is nothing to see in any of this.

Well, gosh, perhaps cash taxes paid aren’t a good guide to the tax bill concerning any one year then?

8 thoughts on “Coffee shops are now vital to the economy”

  1. I’m increasingly coming to the view that Murph crept in the back door at the Institute of Accountants on a quite day, found where they keep the blank diploma certificates and wrote out one for himself and then added himself to the “register of accountants”.

  2. Dennis, CPA to the Gods

    The accounts offer no clear insight as to what is going on.

    Actually, he’s correct. That’s because he’s looking for financial information for the UK only. Starbucks doesn’t present such information, and it doesn’t because IFRS doesn’t require them to. Taken as a whole, Starbucks business activity in the UK does not rise to the threshold required for separate disclose. IFRS doesn’t require country by country reporting; it requires disclosure on a company business unit that is deemed to be material enough to warrant disclosure.

    Starbucks still needs to put all their cards face up on the table in a spirit of transparency and openness and it is still not clear that they are.

    Actually, Starbucks is being as open and as transparent as IFRS requires them to be. What Murphy is complaining about doesn’t actually involve Starbucks’ accounts (although it is doubtful he understands this), it involves the standards set by IFRS. To go further, what Murphy is claiming is that because Starbucks is providing the information required by IFRS standards, rather than what he wants for his own purposes, that are not being “open” and “transparent”. This is nonsense.

    There are numerous ambiguities in the accounts, including a reported £16 million transfer pricing adjustment that increases UK profits but which Starbucks says has nothing to do with tax, plus significant prior year tax adjustments meaning there is a current tax charge when a significant loss was made. Starbucks, I am told, say there is nothing to see in any of this.

    Transfer pricing adjustments in large, multi-national corporations are not particularly rare… To put it mildly. In a corporation the size of Starbucks, a £16 million adjustment doesn’t come close to the threshold of materiality required for separate disclosure. Which is why Starbucks isn’t disclosing it.

    As to prior period tax adjustments, well, those are even less rare. The tax related accounts in the financials are based on estimates. They are not based on actual tax paid, or actual tax incurred. Given that, estimates will require adjustment on a regular and routine basis. Once again, the disclosures required of Starbucks are based on the materiality of the adjustments.

    Bottom Line: Same Spud complaint as always… This company won’t give me information I’m not entitled to.

  3. Murphy has been / is one of the go to ‘experts’ on the BBC for tax and accounting matters. Of course none of the Beeboids has any clue at all as to how to really interview him.

    Now that GB News has launched I have this dream that they will ask Murphy on with you and let you both go at it. Delicious.

  4. MrVeryAngry…. Wat a delightful idea….

    Bet you P³ will find a reason to decline though.. 😉

  5. And Starbucks , in a sense, is a public interest …

    Whatever it is they sell, it should not be allowed to be called “coffee”.

  6. “Whatever it is they sell, it should not be allowed to be called “coffee”.”

    The French girl who was living in my spare room in London was a manager of a Costa Coffee branch, so Costa’s stocks were plundered mercilessly in our interests. I can tell you there’s nothing wrong with Costa’s beans. I doubt there’s any marked difference to the beans at Starbucks. The coffee they sell will correspond to the expectations of their customers & the sort of people who buy coffee at places like Costas & Starbucks aren’t really coffee drinkers. They’re flavoured hot (or iced) drink drinkers. A subtle but important difference. Like there’s no point in serving sushi to someone wants fish fingers.

  7. Costa’s coffee actually tastes of coffee (or at least did last time I tried it); I don’t think Starbucks ever has.

    But yes, BiS has a point; if the customers don’t really want coffee, then they won’t really serve coffee.

  8. Given that worldwide chaos of the last 18 months I’m pretty sure many companies are going to be submitting some very unusual accounts with a number of unexpected adjustments and maybe even for next year or so. Starbucks locally seem to have taken the opportunity to rationalise their locations, if a lease expires very simple not to renew it when the premises is already closed or operating on a partial basis I suppose.

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