Following recent controversy surrounding the tax affairs of international companies operating in the UK, three international staffing companies with substantial operations in this country have refused to disclose details of corporation tax paid in the UK.

Last week, Starbucks agreed to pay £20m in UK corporation tax after it was revealed that it paid just £8.6m in corporation taxes in the past 14 years. Last year it paid no corporation tax on revenues of nearly £400m in the UK, largely because it was able to transfer some of the money to a sister company in the Netherlands in the form of royalty payments.

Other companies to become embroiled in the controversy include Amazon and Google.

Recruiter asked three international staffing companies – Adecco, Kelly Services and Randstad – to provide profit figures for the UK and UK corporation tax paid on any such profits. None of the companies mentioned in this article is accused of doing anything illegal. However, none were prepared to provide all the information requested. 

Adecco provided the following information for the UK & Ireland (also published in its accounts):

An Adecco spokesperson tells Recruiter: “We do not disclose the figures for the UK separately; note however, that the share of our operations in Ireland is very small. Also, I am afraid we do not disclose the tax rate at a country level.”

However, the spokesperson adds that gross and EBITA [earnings before interest, tax and amortisation] margins are “clearly below group level”, and in Q2 and Q3 of 2012 “we achieved EBITA margins of less than 1%, and hence we barely broke even, even before the tax line. Please understand that we are a listed company, and are not in a position to make selective disclosure”.

Operating income is a “pretty good proxy” for the pre-tax profit on which corporation tax is levied, Chris Burger, managing director of financial analyst firm Helvea, and an Adecco specialist, tells Recruiter. However, he adds it doesn’t tell you the amount of corporation tax paid.

Burger continues that Adecco Group’s reported rate of corporation tax of 24% in 2011 and his calculations for an expected rate of 29% in 2012 doesn’t give any indication of the rate it pays in the UK, where profits are “relatively small”. 

Tax arrangements have been under scrutiny by MPs and the media, with claims that companies move money between countries to take advantage of low tax jurisdictions. With the rate of corporation tax in Ireland at 12.5% compared with 24% in the UK, Recruiter asked Adecco whether the company had transferred profits earned from activity in the UK to the Republic of Ireland to take advantage of the lower rate. Adecco failed to directly respond to this point.

However, Burger explains that “due to the nature of the staffing industry” there is “limited ability to avoid tax” in this way. “With a staffing company, it is local revenue and local costs so the possibility of switching the profits from the UK to, for example, the Cayman Islands is limited.” Adds Burger: “I don’t think they [Adecco] will do that.”

Randstad reported the following figures for the UK: 

A Randstad spokesperson tells Recruiter: “We don’t disclose effective tax rates per country because we only have to disclose this at group level, which is also the level of disclosure required for our annual report. We pay taxes according to international and local regulations.” 

According to accounts published by Kelly Services, the firm had UK revenues of $79.3m (£49.3m) in the first nine months of 2012 and $92.5m for the same period in 2011.

A spokesperson for Kelly Services tells Recruiter: “Presently Kelly does not break out tax information by country. As we haven’t made this information public, we can’t do so now as we are governed by government [US Securities and Exchange Commission] regulations.” 

An analyst familiar with the recruitment industry tells Recruiter that the companies refusing to provide information on the amount of UK corporation tax paid are “hiding behind” rules on selective disclosure, which exist both in the UK and internationally. 

Designed to deter insider trading, these require publicly listed companies to release price or market-sensitive information “broadly and simultaneously” rather than on an individual basis, explains the analyst. The analyst adds: “In my view tax information is not price sensitive, and the companies are hiding behind this.” 

A Financial Services Authority spokesperson tells Recruiter that it is up to companies themselves to decide whether particular information is price sensitive or not.