THERE IS “no clear understanding” of whether the Duchy’s of Cornwall’s Crown Exemption from corporation tax and capital gains tax produces adverse consequences for competitors which do pay such taxes, the Public Accounts Committee has claimed.
The Duchy is engaged in a range of business activities like other commercial enterprises, with the difference being other businesses are subject to the usual rules on corporation and capital gains tax. In a report following a hearing with the Prince of Wales’s principal private secretary William Nye in July, the PAC raised concerns the tax exemption “might mean that competing businesses do not have a level playing field on which to operate”.
The Duchy and the Treasury pointed out in the hearing that the Duke of Cornwall does, voluntarily, pay income tax on income derived from the Duchy, and that the Duchy’s tax position had been accepted by parliament.
However, due to a lack of definitive information on the impact of the exemption, the committee has recommended the Treasury should examine the impact on the marketplace of the Duchy engaging in commercial transactions while exempt from tax.
Additionally, the committee suggested the transparency of the Prince of Wales’s tax payments could be improved by reporting separate amounts for income tax and VAT.
In its report, the committee said: “The Treasury is not doing enough to scrutinise the Duchy’s financial strategy or transactions-it does not independently verify information offered by the Duchy, and details of its approvals for the Duchy’s land transactions over £500,000 are not published. The Duchy has a Crown Exemption from tax, but there is no clear understanding of any consequences for its competitors, which are subject to corporation and capital gains tax. The transparency of The Prince of Wales’s tax payments is limited by reporting only a combined amount for income tax and VAT.”
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