Prince Charles’s tax needs more scrutiny, say MPs

The public accounts committee (PAC) wants officials to assess if the Duchy of Cornwall – a portfolio of land, property and investments – has led to the creation of an “unlevel playing field” because it is not liable for corporation tax or capital gains tax.

Over the last financial year it generated £28.8m, and the prince received an income of £19m, up 4 per cent on the previous year.

The money is partly used to fund his and his family’s public, charitable and official duties, and the prince voluntarily pays income tax on the cash left after costs – around £9.2m last year, the PAC said.

Failure of scrutiny

But it called for his income tax arrangements to be opened up to scrutiny to improve transparency.

“The combined total of income tax and VAT paid by the prince of Wales was £4.4m,” the PAC said in a report on the Duchy of Cornwall accounts.

“This amount was not broken down into its two elements and so it is not transparent precisely how much, and what rate of income tax is paid by the prince of Wales (though we acknowledge the duchy having told us that the vast majority of the £4.4m is income tax).”

It is not transparent precisely how much, and what rate of income tax, is paid by the prince of Wales. PAC report

MPs accused the Treasury of failing properly to scrutinise the duchy’s finances because it relies on the estate officials to provide it with accurate information and does not carry out its own independent checks.

They also called for the duchy’s charter to be reformed, claiming it has not kept pace with constitutional change because it can only be passed down to a male heir.

“The duchy would benefit from being brought into the present-day to allow a female heir to the British crown to bear the title ‘duke of Cornwall’,” the PAC report said.

Present-day expectations

Labour’s Margaret Hodge, who chairs the PAC, urged the duchy to modernise.

“The duchy of Cornwall performed well in 2012-13, increasing its total income and producing an overall surplus of £19.1m,” she said.

“However, there are a number of steps that could help to bring the duchy, an historic institution, more in line with the expectations of the present day.

The duchy’s tax exemption may give it an unfair advantage over its competitors who do pay corporation and capital gains tax. PAC report

“The Treasury does not do enough to properly scrutinise the duchy’s finances. It relies on the duchy to provide it with accurate information without carrying out its own independent checks.

“Details of the Treasury’s approvals for the duchy’s proposed land transactions over £500,000 – of which there are around 15 a year – are not published. Greater transparency is needed.

“The duchy enjoys an exemption from paying tax even though it engages in a range of commercial activities. This tax exemption may give it an unfair advantage over its competitors who do pay corporation and capital gains tax.

“The Treasury should examine whether the Duchy’s tax exemption creates an unlevel playing field.”

‘No competitive advantage’

But the Duchy of Cornwall rejected the “unlevel playing field charge. A duchy spokesperson told Channel 4 News –

“As we explained in the PAC hearing, we do not believe we have a competitive advantage. The duke of Cornwall’s income is taxed at income tax rates.

“The duchy is not subject to corporation tax and the duchy is not a corporation. The duchy is exempt from tax on capital gains, any capital gains have to be reinvested in the business and cannot be distributed.”

We do not believe we have a competitive advantage. The duke of Cornwall’s income is taxed at income tax rates. Duchy of Cornwall spokesperson

The duchy says it will “carefully consider” the PAC report. And its spokesperson noted –

“We are pleased to see that the committee has highlighted the duchy’s success in achieving an increased revenue surprlus and that it has praised the high quality of our work at Poundbury.”

Poundbury is an experimental urban development on the edge of Dorchester, in Dorset, built on land owned by the Duchy of Cornwall. The duchy website describes it as an “extension to Dorchester” and “a pioneering example of urban development”.