Sunday, 16 December 2012

All In Tax Together, eh Royals and Corporates

Much has been made of starbucks decision to volunteer some corporation tax, when clearly they should pay the proper rate as does every small buisness.

I wondered how long it would take for someone to remember that the Royals also choose how much tax they pay. Some even call them the biggest benefits scroungers as though a small number of people they suck up huge sums and own vast amounts.

"The duchy of Cornwall last year provided Charles with an income of £18m and HMRC's anti-avoidance group is now being asked to examine its non-payment of corporation tax following a potentially significant court ruling on its legal status. The issue has been raised by an accountant investigating the tax affairs of the duchy – an agricultural, commercial and residential landowner. He has analysed the impact of a judicial ruling handed down last year.

The duchy insists it "is not subject to corporation tax as it is not a separate legal entity for tax purposes". But John Angel, principal judge at the information rights tribunal, ruled last December it was a separate legal body to the prince.

Accountants now believe the ruling could leave the duchy exposed to the 24% levy on profits other organisations must pay. Any change to its tax status could result in a cut to the prince's income.

A spokesman for HMRC said it would evaluate the information and "take appropriate action". Clarence House strongly denies claims of avoidance. Look a talking house.

The move comes as the House of Commons public accounts committee, which earlier this month criticised Starbucks, Google and Amazon for their "immoral" decisions to avoid paying more corporation tax, prepares to hold a hearing next year into the royal finances. As well as duchy income, last year Charles received £2.2m in grants from the taxpayer to pay for his travel by private jet, helicopter and train and the upkeep of Clarence House.

He voluntarily paid tax of £5m on his £18m income from the duchy last year, which Clarence House said was at the full 50% rate after deductions from expenses.

The duchy owns 53,000 hectares of land in 23 counties, including Prince Charles's Gloucestershire home of Highgrove. It has provided incomes to successive Princes of Wales since the 14th century. The assertion that the estate is inseparable from Charles has allowed him to use its gross profits to fund private and official spending including 26 valets, gardeners and farm staff. In the past five years he has received more than £86m from the arrangement.

"There appears to be no legal basis on which the duchy is not taxed and there is no legal basis for the arrangement under which Prince Charles pays tax on an ad hoc basis of his own making," said Richard Murphy, who runs Tax Research LLP, and has examined the duchy's arrangements. "We have a token PR gesture from Prince Charles, not unlike Starbucks' arrangement [to pay voluntary corporation tax]."

"It is certainly interesting that the tribunal concluded that the duchy of Cornwall was a body for purposes of the environmental information regulations," he said. "Corporation tax applies to 'companies', but for this purpose the term 'company' has a very wide meaning. It includes any body corporate or unincorporated association."

"His taxes are checked by the Inland Revenue, like anyone else, which reviews all his business deductions," said a spokeswoman. "In 2011-2012, the Prince of Wales paid the full amount in tax, which was almost £5m during this period."

Inheritance tax – which at the current rate of 40% would be a bill of £280m – has not been levied on the duchy. Ever.

Theres no mention here of the duchy of Lancaster, but I suspect its a similar tale.


In 1992, the Queen volunteered to pay income and capital gains tax in a deal that exempted her from paying inheritance tax of up to £20m on the Queen Mother's will. Her main tax liability comes from her investment portfolio, which includes the Balmoral and Sandringham Estates, the value of which has never been disclosed. Her expenditure on official engagements is deductible from taxable income, but her dresses are not because they are likely to serve "a personal purpose which makes it disallowable".

Prince Charles receives state grants to help pay for his official duties, but for the bulk of his costs he draws income from the Duchy of Cornwall which is taxed at normal rates after deductions for expenses. He paid almost £5m in the tax last year on an income of just over £18m. Clarence House said this was almost all at the top rate of 50% after deductions. His return is audited by inspectors from the HMRC. The taxpayer covers council tax for Royal properties that are vacant or used as staff accommodation. In 2009 it was estimated the queen paid just £1,375 in rates for Buckingham Palace.


howard thomas said...

Always remember Adrian that 'tax is for small people'.
Starbucks is a classic example what big companies do to avoid taxation and it is quite clear that the only reason that they have voluntarily opened 'negotiations' with HMRC is because they have been badly hurt by the adverse publicity.
Perhaps it would be a good thing if there was a widely published 'league table' of those companies that paid their taxes properly .......and those that do not. The public would vote with their feet and not buy from those that don't pay their dues.
And then look at Thames Water who don't pay corporation tax on profits of circa £600million! It should not be in private hands.

As something to consider........I wonder how much tax the people's hero Richard Branson pays..........

Adrian Windisch said...

I dont know about Branson, but mostly agree with you Howard. UKuncut are the campaigners leading the way on corporates not paying proper tax.

Doesmt Branson own an Island? Wonder if its also a tax haven.

Adrian Windisch said... it seems Branson does avaoid tax with Virgins move to switzerland and his own personal schemes.

We should employ a tax avoidance expert to rewrite our tax rules to catch everyone fairly. At the moment the poor and te middle subsidise the rich.

howard thomas said...

Cameron did/does employ a tax avoidance expert to advise the Philip if there was an outstanding expert , he must surely be the one! Talk about giving the firefighter's job to the arsonist!

I suspect that Mr Branson's tax position might be summed up in the name , Virgin (islands) ?? I don't know, but I bet its very likely that our 'hero' pays very little UK tax.

I note the Telegraph link. Did you see the Panorama programme this week about the Barclay brothers and the fact that they pay no UK tax and have set up their properties and businesses to avoid death duties. They own the Riyz , and it is in such a bad financial state that it hasn't paid a penny in tax in 17 years!
Funnily enough both Cameron and Osbourne declined to comment. The Blairs, Browns and Camerons have all had various meetings and meals with their son who runs the Telegraph. No surprise there then for the lack of comment!!!

By the way, your 'robot' test to enter a comment is a bit tough. You might be losing comments because of it. Now having my 5th go!!

Adrian Windisch said...

Cheers Howard will change settings.