UK Ministers To Challenge Royals’ Tax Exemptions

The finances of the British Royal Family may come under scrutiny by the government later this year, reported The Guardian last week, after a group of MPs challenged the tax exemptions enjoyed by the monarchy, particularly those of Prince Charles, the heir to the throne.

The finances of the British Royal Family may come under scrutiny by the government later this year, reported The Guardian last week, after a group of MPs challenged the tax exemptions enjoyed by the monarchy, particularly those of Prince Charles, the heir to the throne.

According to Margaret Hodge, Chair of the Public Accounts Committee, a select group of ministers responsible for overseeing government expenditures, the current tax arrangements allowed Prince Charles to not have to pay corporate or capital gains tax on his £728 million hereditary estate, which earned him £18.3 million in private income last year.

Hodge, who previously led investigations into Google, Amazon and Starbucks for tax avoidance, further called for the Queen’s accounts to be audited for the first time in history, particularly as public spending had gone to cover the monarchy’s expenses.

“A lot of the work we are doing is around tax collection and this is another element the taxpayer has an interest in,” said Hodge.

[quote]”Taxpayers are concerned that everyone pays their fair share,” she added.[/quote]

Prince Charles, known as the Duchy of Cornwall, presently owns 53,000 hectares of land in 23 counties. Some properties, including Prince Charles’s Gloucestershire home of Highgrove, hold major business interests in commercial and residential property and farmland.

“In view of the committee’s and the public’s concern on this matter,” greg Clark, the financial secretaryshould clarify “why the tax treatment of the duchy remains defensible,” said Hodge.

The PAC added that they wanted the Treasury to explain “the impact of this favourable tax position on the duchy’s competitive position in … markets in which it operates”.

A royal spokesman has asserted that the Prince’s estate is “not a separate legal entity for tax purposes” allowing Charles to use its gross profits to fund his private and official spending including 26 valets, gardeners and farm staff.

A Clarence House spokesperson also said that, “the duchy is not a company and is not therefore liable to pay corporation tax.”

[quote]“The prince voluntarily pays income tax on income generated by the duchy. Should the prince pay corporation tax as well, this would result in double taxation,” he said.[/quote]

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Britain’s anti-monarchy campaign group Republic though welcomed the news that the PAC was challenging the Royals’ tax exemptions, highlighting a court ruling in 2011, which ruled that the Prince’s estate should be considered a separate legal body from the prince because of “the differentiation of the duchy and duke in commercial and tax matters as well as under legislation and the contractual behaviour of the duchy”.

“We welcome the news that the PAC will be adding the Duchy to their inquiry into corporation tax avoidance. As we pointed out in December there is no justification for the Duchy to be avoiding this tax,” said Republic’s chief executive Graham Smith.

“The duchy is a trading body and major land owner. Like all other trading bodies it should pay its fair share of tax. Instead the Duchy keeps ducking and diving, changing its excuses each time in a desperate bid to justify its position.

[quote]“It is time this well-entrenched tax avoidance scheme was closed down by the Treasury and the royals were told they can no longer enjoy privileged tax status,” Smith added.[/quote]