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Exposed: McDonald’s dodges £295 million in tax while receiving £872 million in UK Covid-19 support

MCDONALD’S has been accused of dodging the payment of £295 million in taxes through byzantine accounting practices while picking up £872m in Covid-19 support, according to a damning new report.

Campaign group War On Want said the multinational fast-food giant initially received the massive subsidy package in 2020 —while enriching shareholders that same year by a record £2.9 billion.

This included £297m in furlough cash, £143m from the “Eat Out to Help Out” scheme, £60m from business rates relief and £372m from a temporarily reduced VAT rate for hospitality businesses.

The group’s report, Secrets and Fries, also notes lobbyists from the extremely profitable firm met Tory ministers 15 times in the same year as most of its stores were shut during two national lockdowns.

War On Want called on HM Revenue and Customs (HMRC) to investigate the company — and for Whitehall to tackle the City of London’s role as a tax haven for global corporations — instead of expecting working people to bail out tax-dodging multinationals.

The group’s Owen Espley said: “McDonald’s has been driving billions of its global income through the City of London — but not stopping to pay its fair amount of UK tax.

“In 2020, McDonald’s workers were paid poverty wages for pushing sales through the roof, while McDonald’s shareholders received a record pay out, inflated by the hundreds of millions of public funds that flowed into McDonald’s.

“Now politicians want ordinary workers to pay for the bailouts big business received — instead of cracking down on corporate tax-dodgers.”

The report accuses the firm of creating a British tax shelter through a paper, circular transaction that moved franchising rights between Singapore and London, enabling McDonald’s to shield its global franchise income from being taxed in this country.

Initiated in 2016, the transaction saw its British-based subsidiary, McD Global Franchising Ltd, purchase the right to collect franchise fees in Asia from a McDonald’s subsidiary in Singapore for about £2.7bn.

The payment, made using a form of “IOU,” was then returned to McD Global Franchising Ltd as a dividend, via other subsidiaries.

The deal allowed the British-based subsidiary to claim an expense for buying the franchise rights, without the income being taxable when it was returned as a dividend, ultimately depriving the Treasury of nearly £300m in tax revenue over the next 10 years.  

War On Want urged HMRC to investigate the transaction and the company’s current structure as its “primary purpose appears to be to create a tax avoidance scheme.”

A HMRC spokesperson told the Morning Star it was “committed to making sure everyone pays their fair share of tax.

“HMRC actively challenges multinationals on tax due, including currently £13.2bn of international tax risks.

“Furlough provided a lifeline to more than a million businesses across the UK and protected nearly 12 million jobs — with businesses passing all the money they received from the scheme on to employees.”

Former McDonald’s worker Lewis Baker told the Morning Star: “Once again, we can see that massive corporations are able to get away with paying taxes while some of the lowest paid in this country struggle to get by – living pay day to pay day.”

Mr Baker was involved in the groundbreaking McStrike campaign, led by bakers’ union BFAWU, which demanded better pay and working conditions for McDonald’s workers.

He added: “The profits of these companies should be given back to the workers who make it — you shouldn’t have to choose between heating or eating.”

BFAWU national president Ian Hodson told the Morning Star: "This is just one example of how the corporations made sure they were OK whilst the taxpayer was expected to picking up the bill.

"This is a huge scandal that politicians have failed to deal with. It’s clear the business lobby benefits from its political donations and reaps huge rewards.

"People should punish politicians who fail to stand up for us. We not only need a better deal for workers, decent pensions and a fair benefit system, we also need tax justice too because if they paid their taxes we could afford all of these things.

"We support the need for an urgent HMRC investigation into this shocking revelation, not in years but now."

A McDonald’s statement said: “We disagree with these inaccurate characterisations used to build a misleading narrative about McDonald’s role as a corporate citizen in the UK.

“McDonald’s complies fully with the laws of each jurisdiction in which we operate and pays all taxes owed.

“We have received no special incentives or other concessions associated with our operations in the UK.

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