THE Treasury has been urged to investigate whether the Prince of Wales’s estate has an “unfair advantage” over rivals because it is exempt from business taxes.
MPs want officials to assess if the Duchy of Cornwall, a portfolio of land, property and investments, has led to the creation of an “unlevel playing field” because it is not liable for corporation tax or capital gains tax.
Over the last financial year it generated £28.8 million and the prince received an income of £19m, up 4 per cent on the previous year.
The money is partly used to fund his and his family’s public, charitable and official duties and the prince voluntarily pays income tax on the cash left after costs, about £9.2m last year, the Public Accounts Committee (PAC) said.
It called for his income tax payments to be open to scrutiny to improve transparency.
“The combined total of income tax and VAT paid by the Prince of Wales was £4.4m,” the PAC said in a report on the Duchy of Cornwall accounts.
“This amount was not broken down into its two elements and so it is not transparent precisely how much, and what rate of, income tax is paid by the Prince of Wales (though we acknowledge the Duchy having told us that the vast majority of the £4.4m is income tax).”
MPs accused the Treasury of failing to properly scrutinise the Duchy’s finances because it relies on estate officials to provide it with information and does not carry out independent checks.
They also called for the Duchy’s charter to be reformed, claiming it has not kept pace with constitutional change because it can only be passed down to a male heir.
“The Duchy would benefit from being brought into the present day to allow a female heir to the British crown to bear the title Duke of Cornwall,” the PAC report said.
Labour’s Margaret Hodge, who chairs the PAC, urged the Duchy to modernise.
She said: “The Duchy of Cornwall performed well in 2012-13, increasing its total income and producing an overall surplus of £19.1m. However, there are a number of steps that could help to bring the Duchy, a historic institution, more in line with the expectations of the present day.
“The Treasury does not do enough to properly scrutinise the Duchy’s finances. It relies on the Duchy to provide it with accurate information without carrying out its own independent checks. Details of the Treasury’s approvals for the Duchy’s proposed land transactions over £500,000 – of which there are around 15 a year – are not published. Greater transparency is needed.
“The Duchy enjoys an exemption from paying tax even though it engages in a range of commercial activities. This tax exemption may give it an unfair advantage over its competitors who do pay corporation and capital gains tax. The Treasury should examine whether the Duchy’s tax exemption creates an unlevel playing field.
“The transparency of the Prince of Wales’ tax payments is limited by the fact that income tax and VAT are reported only as a combined total. These figures should be disclosed separately.”