MPs urge royal tax probe
The Treasury has been urged to investigate whether the Prince of Wales's estate has an "unfair advantage" over commercial rivals because it is exempt from costly 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 £19 million, up 4% 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, around £9.2 million last year, the Public Accounts Committee said.
But it called for his income tax arrangements to be opened up to scrutiny to improve transparency.
"The combined total of income tax and VAT paid by The Prince of Wales was £4.4 million," 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 £4.4 million is income tax)."
MPs accused the Treasury of failing to properly scrutinise the Duchy's finances because it relies on the estate officials to provide it with accurate information and does not carry out its own 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 £19.1 million.
"However, there are a number of steps that could help to bring the Duchy, an 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, so we can understand precisely how much, and at what rate, income tax is paid by the Prince.
"At the moment, the Duchy's charter rules that each future Duke of Cornwall be the eldest son and heir of the monarch, which is out of line with the Succession to the Crown Act 2013. A female heir to the British throne should be allowed to bear the title 'Duke of Cornwall'."
A Duchy of Cornwall spokeswoman said: "We will carefully consider the content of the report and will contribute as necessary to any response by the Treasury.
"As we explained in the hearing, we do not believe the Duchy has an unfair tax advantage over its competitors. The Duke of Cornwall's income is taxed at income tax rates. The Duchy is not subject to corporation tax and the Duchy is not a corporation. The Duchy is exempt from tax on capital gains, any capital gains have to be reinvested in the business and cannot be distributed.
"We are pleased to see that the committee has highlighted the Duchy's success in achieving an increased revenue surplus and that it has praised the high quality of our work at Poundbury."
A Treasury spokeswoman said: "The Duchy of Cornwall is exempt from paying tax, like the Crown, and has been since the founding of the Duchy in the 14th century. Since 1993 the Prince of Wales has voluntarily paid tax on his private income, including income from the estate.
"HM Treasury's role is to ensure that the Duchy of Cornwall is managed in a sustainable way and that the strategic choices made by the estate's managers are in its long-term interests and those of current and future dukes. The Treasury has a constructive working relationship with the Duchy, and challenges decisions where appropriate."