MPs raised the possibility of greater future public scrutiny of Prince Charles’s tax arrangements.
Note: This article is from the Guardian.
Prince Charles has been accused by an MP of “dodging around for tax purposes” during a testy select committee hearing in which the heir to the throne’s most senior aides were grilled by members of the Commons public accounts committee over his financial affairs.
The allegation was made in a series of exchanges on Monday between MPs and William Nye, the Prince of Wales’s principal private secretary, who defended corporation and capital gains tax exemptions enjoyed by his boss’s £847m hereditary Duchy of Cornwall estate.
Nye was repeatedly questioned as to why the Duchy was not a corporation, even though it has a head who is effectively a chief executive, it buys and sells assets and has trademarks. Its legal status is that it is a private estate.
“Given the Duchy of Cornwall behaves like a corporation with its income from complex investments … on the face of it many of my constituents would say it should pay corporation tax and capital gains tax,” said Labour MP Nick Smith.
Nye responded: “Essentially it’s a set of properties that belong to the Duke of Cornwall. The fact that it’s a large set of properties doesn’t mean it is a corporation.”
“You are really dodging around for tax purposes,” said Austin Mitchell MP. “[You say] it is not a corporation, but it is.”
The landmark hearing came after the MPs investigated alleged tax avoidance by Amazon, Google and Starbucks and the MPs wanted to know why the Duchy believed it had a special status. They called for greater transparency in the Duchy’s accounts and Charles’s own spending.
The Duchy owns swaths of rural and commercial property as well as housing in the south-west of England. Among its assets are a Waitrose supermarket depot in Milton Keynes and a Holiday Inn hotel in Cornwall.
The chairwoman of the PAC, Margaret Hodge, asked Nye if he believed “there is an issue of fairness and level playing fields” in the Duchy making investments in businesses without having to pay corporation tax or capital gains tax as their rivals must.
Nye responded: “I don’t believe it is unfair, no.”
Hodge said she could not understand why he could not see the competitive advantage.
Nye admitted the Duchy was an “unusual” entity, but under cross-examination he repeatedly pointed out that Prince Charles chooses to pay income tax at the highest rate on his earnings from it, after deductions for expenses.
“It is a private landed estate,” Nye said. “He [Charles] manages it and he is responsible for running it. He receives an income but the assets of the estate he has to manage for future generations.”
Keith Willis, finance director of the Duchy of Cornwall, justified the Duchy’s non-payment of corporation tax by saying there are many property companies that pay very little corporation tax – an argument that Hodge said was “shocking, shocking, shocking”.
After a series of robust exchanges, the MPs raised the possibility of greater future public scrutiny of Prince Charles’s tax arrangements. Hodge called on the prince’s aides to publish a detailed breakdown of the expenses – £10m last year – that he offsets against his income tax bill or risk damage to the Prince of Wales’ reputation.
Only the royal family, its advisers and HM Customs and Revenue currently know what the prince claims as his expenses before tax on his £19m income from the Duchy of Cornwall.
“It would be healthy for our understanding and acceptance of this, and the reputation of the Prince of Wales, if we had greater public understanding of how he has assessed his own expenses,” said Hodge.
Nye responded: “This relates to the private tax affairs of the Prince of Wales. In general those are not public.”
Paula Diggle, Treasury officer of accounts at HM Treasury, which vets the Duchy’s transactions valued at more than £500,000, said the Treasury had never rejected one outright, although it had managed to changed others to ensure they were on “commercial” terms. Nye said it would be “inappropriate” to open the Duchy books to the National Audit Office.
• This article was amended on 17 July 2013 to clarify that the Duchy of Cornwall owns a Waitrose depot, rather than a supermarket, in Milton Keynes.
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