File photo of Britain's Prince Charles.

Story highlights

Clarence House has defended the Prince of Wales' financial arrangements on taxes

Anti-monarchy campaigners accuse the Duchy of Cornwall of avoiding corporate tax duties

The accusations come on the back of similar charges leveled against Starbucks and Google

Financial Times  — 

Clarence House has defended the Prince of Wales’ financial arrangements after antimonarchy campaigners accused the Duchy of Cornwall of using “a highly questionable interpretation” of its legal status to avoid corporation tax.

Republic, which campaigns for an elected head of state, said it had written to HM Revenue & Customs (HMRC) asking it to investigate and “take the necessary steps to ensure that the Duchy is paying corporation tax in line with normal practice for corporate entities.”

Read more: Duchess attends first public event since pregnancy

But Clarence House said on Saturday there was no legal basis for the Duchy to pay corporation tax as the Duchy was a trust set up to generate income for Princes of Wales. It said: “The Prince voluntarily pays income tax on income generated by the Duchy, so there is no legal requirement to pay corporation tax and to do so would result in double taxation.”.

Republic based its criticisms on a November 2011 tribunal ruling on a dispute over whether the Duchy was required, as a public authority, to conduct an environmental assessment of an oyster farm. Republic said that the tribunal’s finding that the Duchy was a “body or other legal person” meant it had “its own tax obligations”.

Read more: Starbucks tax woes extra shot for Costa

But the findings of the tribunal, which said the Duchy’s historical context was “complicated and possibly unique”, do not provide any clear-cut support for this view. It found against the Duchy on the grounds it was a public authority. The ruling said the Duchy’s modern role was “carrying out the public function or service of providing an income for the undertaking of an extremely important constitutional role for the UK.”

Republic’s move came in the wake of intense public interest in corporate tax after the Public Accounts Committee criticised Starbucks, Google and Amazon over their tax arrangements earlier this month.

Graham Smith, chief executive of Republic said: At a time when the country is under unprecedented economic stress it is unacceptable that the heir to the throne is avoiding his tax obligations in this way.”

He added: “As with Starbucks and Google there is a moral obligation to pay a fair rate of tax.”

The Duchy was established in 1337 to provide an income for the eldest living son of the Monarch, by a charter stipulating that he would be entitled to it income, but not to the capital, thereby preserving the estate for his successors. It is a landed estate, mostly in the south west of England, comprising 53,628 hectares.