Prince Charles’s £700 Million Estate Accused Of Tax Avoidance
The UK’s revenue and customs authorities (HMRC) have been asked to investigate Prince Charles’s £700 million ($113,176,000) hereditary estate for alleged tax avoidance.
Last year, Prince Charles received £18 million ($29,102,400) from the duchy of Cornwall (DOC), a landowner estate created in 1337 for the benefit of each successive Prince of Wales.
The HMRC’s anti-avoidance team has been asked to examine the duchy of Cornwall’s non-payment of corporation tax following a significant court ruling on its legal status.
That court ruling arose when Mike Bruton — former head of the “Campaign to Protect Rural England in Cornwall” — won a landmark case against the DOC in 2011, after a four year fight to prove that a Cornwall oyster farm owned by the Prince was damaging a designated special conservation area.
The Guardian reports that in December 2011, John Angel — principal judge at the Information Rights Tribunal — ruled that the duchy estate was a separate legal body to the prince, rather than a private one as the estate claimed.
As a result the duchy was obligated to reveal information under the Environmental Information Regulations (EIR). However, the estate successfully applied for a “stay of proceedings” while a test case was heard in the European Court of Justice (ECJ).
Fast forward to December 12, 2012, the Daily Telegraph reported that a judge ruled that the stay of proceedings should remain in place until the ECJ makes its ruling in about a year’s time.
However, The Guardian reports that, despite the stay of proceedings, accountants investigating the tax affairs of the DOC have said the ruling could leave the “duchy exposed to the 24% levy on profits other organisations must pay.”
This is directly contrary to the duchy’s own annual report, which states that it “is not subject to corporation tax as it is not a separate legal entity for tax purposes.”
Additional protest comes from “Republic” — the campaign for an elected head of state — who have asked the HMRC to investigate whether the ruling means the duchy is now “using a highly questionable interpretation of its legal status as a means of avoiding corporation tax obligations.”
The context of the investigation into Prince Charles’ financial affairs, is that earlier this month the House of Commons public accounts committee criticized Starbucks, Google and Amazon’s tax avoidance as “immoral.”
In addition to his duchy income, Prince Charles received £2.2 million ($3.55 million) last year from taxpayer grants to pay for travel by private helicopter, private jet, and train and the maintenance of his London home, Clarence House.
The Guardian reports that the duchy owns 53,000 hectares of land in 23 counties and “the assertion that the estate is inseparable from Charles has allowed him to use its gross profits to fund private and official spending including 26 valets, gardeners and farm staff. In the past five years he has received more than £86 million (£139,944,800) from the arrangement.”
Public records reveal that Inheritance Tax — which at the current rate of 40% would be a bill of £280m (452,704,000) — has not been levied on the duchy, although Prince Charles voluntarily paid £5 million ($ 8.8 million) tax on his £18 million ($29,102,400) income from the duchy in 2011.
A spokesman for Prince Charles said:
“The capital assets of the duchy do not vest in the duke and pass from one duke to another in perpetuity. The Prince of Wales has no entitlement to the duchy’s assets.”
The Guardian notes that a spokesman for the HMRC said it would evaluate the information and “take appropriate action.”