UK’s HM Revenue & Customs has been asked to investigate alleged tax avoidance by Prince Charles’s £700m hereditary estate. As reported by the Guardian, due to an information commissioner ruling in November in 2011 means the 675-year-old Duchy is a separate legal entity to the Prince – to whom it paid more than £18 million last year – making it liable for corporation tax. But the duchy insists it “is not subject to corporation tax as it is not a separate legal entity for tax purposes”. But John Angel, principal judge at the information rights tribunal, ruled last December it was a separate legal body to the prince.
According to the report, the duchy of Cornwall last year provided Charles with an income of £18m and HMRC’s anti-avoidance group is now being asked to examine its non-payment of corporation tax following a potentially significant court ruling on its legal status.
The issue has been raised by an accountant investigating the tax affairs of the duchy – an agricultural, commercial and residential landowner. He has analyzed the impact of a judicial ruling handed down last year. Anti-monarchy campaigners claim it shows the duchy is running “a well-entrenched tax avoidance scheme”.
Accountants now believe the ruling could leave the duchy exposed to the 24% levy on profits other organizations must pay. Any change to its tax status could result in a cut to the prince’s income.
Prince Charles voluntarily paid tax of £5m on his £18m income from the duchy last year, which Clarence House said was at the full 50% rate after deductions from expenses.
The duchy owns 53,000 hectares of land in 23 counties, including Prince Charles’s Gloucestershire home of Highgrove. It has provided incomes to successive Princes of Wales since the 14th century. 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 £86m from the arrangement.
Graham Smith, director of Republic, said: “For Charles, the duchy operates as his own personal tax haven, depriving the public coffers of millions of pounds – money that could be spent on public services. “At a time when the country is under unprecedented economic stress it is unacceptable that the heir to the throne is avoiding his tax obligations in this way.”
Looks like the Monarch may have a large tax bill to resolve.