Prince Charles has been reported to the revenue over claims the Duchy of Cornwall is a ‘well entrenched tax avoidance scheme’.
Clarence House defended the Prince of Wales’ financial arrangements today after “Republic” compared the royal to Starbucks and Google, who recently come under the spotlight for their tax arrangements.
Republic, which campaigns for an elected head of state, said it had written to HM Revenue and Customs (HMRC) and Margaret Hodge, chairwoman of the Public Accounts Committee, asking them to investigate the £728 million organisation’s tax arrangements.
Below is a copy of the letter.
Anti Avoidance Group (Intelligence)
HM Revenue & Custom
CTIAA Intelligence S0528
PO Box 194
13 December 2012
To whom it may concern
I wish to raise with you the matter of the Duchy of Cornwall, which I believe is using a highly questionable
interpretation of its legal status as a means of avoiding corporation tax obligations.
The Duchy operates as a corporate entity, engaging in property management and other commercial
activities. In its own words, “the principal activity of the Duchy is the sustainable, commercial
management of its land and properties.” [Duchy Annual Report 2011/12]. It makes an annual profit of
Currently the Duchy pays no corporation tax at all.
The Duchy claims that there is no distinction between the Duchy – the organisation that operates on a
commercial basis – and Prince Charles – who, as the Duke of Cornwall, heads the Duchy and receives its
profits as personal income. In their words, “The Duchy is not subject to Corporation Tax as it is not a
separate legal entity for tax purposes.”
I believe this lack of distinction between the Duke and the Duchy to be erroneous and nothing more
than a well-entrenched tax avoidance scheme.
In support of my view a recent Information Rights Tribunal ruled that the Duchy is a separate legal person.
In Bruton v IC and The Duchy of Cornwall & The Attorney General to HRH the Prince of Wales
(EA/2010/0182) the tribunal found that, “whatever the basis of the Duchy under the 1337 Charter, we find
that the Duchy is now a body or other legal person.”
In the tribunal’s findings the reasons for rejecting the notion that the Duchy is a separate legal entity are
set out at length, specifically on pages 13-17 [see
The logic of the Duchy’s argument is that if they were to pay corporation tax then Prince Charles would
be taxed twice on the same income, as he voluntarily pays income tax on the profits that are handed to
him from the Duchy.
However, in any other corporation shareholders, owners and employees must pay income tax while their
company pays corporation tax. The company is deemed a separate legal entity which has its own tax obligations. Any profits or income derived from the company by owners, shareholders or employees is
after tax and any such income is also liable for personal income tax.
The clearest analogy with the Duchy is that of a company with a sole shareholder, who in any other
circumstances would pay income tax on their dividend. The company would also be liable separately
for corporation tax.
I would therefore ask that you investigate this matter and take the necessary steps to ensure that the
Duchy is paying corporation tax in line with normal practice for corporate entities.
All the best
Chief Executive Officer
Cc: Rt Hon Margaret Hodge MP, Chair of Public Accounts Committee