An aide to Prince Charles has admitted that his estate, the Duchy of Cornwall, has a 'very unusual' tax status but denied that it was a 'medieval anomaly' in evidence to the Public Accounts Committee (PAC).
William Nye, Prince Charles' private secretary, described it as a 'private estate' which is 'a force for social good' and could not be compared to a conventional corporation or commercial entity. While Prince Charles voluntarily pays income tax on the Duchy's annual surplus the estate itself is exempt from capital gains and corporation taxes and is worth an estimated £762m.
The Prince last year received an annual income from the duchy of £19m, on which he paid £4.4m in income tax and VAT. The estate's income included £1.3m in rent from Dartmoor Prison and £2m from Waitrose for the use of a warehouse the Duchy owns in Milton Keynes.
The PAC said it wanted to reflect on the current arrangements to see whether or not they reflect the reality of the world today.
Nye said the prince's estate does not pay capital gains tax because he 'doesn't have access to the capital gains. The capital gains are all reinvested in the duchy for future dukes'.
Labour MP Nick Smith said: 'If it looks like a duck and quacks like a duck, and swims like a duck you sort of assume it's a duck. Given the Duchy of Cornwall looks and behaves like a corporation with income from complex investments. And quacks like a corporation with a council including the great and good from banking. On the face of it many of my constituents would say the Duchy should pay corporation tax and capital gains tax. Aren't my constituents being reasonable?'
In response, Nye said: 'Essentially it's a set of properties that belong to the Duke of Cornwall, the fact that it's a large set of properties and its worth a lot of money doesn't per se make it a corporation. And the memorandum of understanding establishes that it's not a corporation subject to corporation tax.'
After a series of robust exchanges, the committee suggested that Prince Charles should publish a detailed breakdown of the expenses, which came to £10m last year, that he offsets against his income tax bill in order to ensure transparency.
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. Nye said it would be 'inappropriate' to open the Duchy books to the National Audit Office.
