Treasury urged to review duchies' tax exemption
Public Accounts Committee targets tax breaks for Royals
An influential committee of MPs has proposed a review of the payment of tax
on Royal Duchies held by the Queen and Prince Charles.
The Public Accounts Committee this week said the Treasury should review
exemption for the duchies of Lancaster and Cornwall from capital gains and
corporation tax.
‘The duchies do not pay corporation or capital gains tax. It would be useful
for the Treasury to provide justification for the tax position of the duchies,
as distinct from that of the Queen and the Prince of Wales,’ the report, out
today, says.
The Queen and the Prince of Wales pay income tax on revenues they receive
from the duchies, but the duchies themselves have exemptions on corporation tax
on the profits, as well as any capital gains liabilities.
The report also said that the accounts of the duchies should be inspected by
the National Audit Office. PAC Chairman Edward Leigh said Sir John Bourne, head
of the NAO, should look at the accounts: ‘As these arrangements have been in
place for over six hundred years, such a review would hardly be over-hasty.
‘Our work has revealed obscurities and potential conflicts of interest in the
management and governance of the duchies accounts.’
The committee noted several strange accounting practices, including taking
certain staff and development costs out of revenue accounts and charging them to
capital accounts.
The Duchy of Lancaster was also unable to reconcile a £2m discrepancy between
real and apparent profits and both duchies, had they been complying with FRS17,
would have shown large deficits in their pension fund.
Both duchies rejected the call for NAO review and told the committee they
considered that as private estates they should be able to choose their own
auditors. They were satisfied with the current arrangements.