CAFFE NERO, the coffee house chain, is the latest company to be caught sidestepping tax — after being found to have paid no corporation tax in Britain for the past two years.
Despite profits of more than £36m over that period, it has used entirely legal accounting manoeuvres to avoid payments.
Caffè Nero owns more than 450 branches across the country and is controlled through a complex structure of subsidiaries in the UK, the Isle of Man and Luxembourg, a tax haven.
According to experts, it borrows money from its offshore sister companies and uses interest payments on this debt to offset its tax liabilities in Britain.
If it’s paying interest on loans then it’s not making a profit. Because interest on loans is a deductible expense of a business. It just ain’t tax dodging.
There is an interesting discussion to be had about the interest rate that is being charged, sure. If they’re charging themselves 20% pa then that would be dodgy. But HMRC would already have had something to say about that. So they’re obviously not.