Examination of Witnesses (Questions 240-259)
THE ACCOUNTS
OF THE
DUCHIES OF
CORNWALL AND
LANCASTER
7 FEBRUARY 2005
Q240 Mr Davidson: Capital gains tax,
corporation tax.
Mr Ross: I am not in a position
to be able to comment on that, simply because we do not have base
values, for a start, for capital gains tax.
Q241 Mr Davidson: So you do not buy
and sell anything at all during the course of a year?
Mr Ross: No, we do indeed.
Q242 Mr Davidson: You must be able
to assess how much the corporation and capital gains tax would
have been, but you have not done so.
Mr Ross: We do not have base values.
Q243 Mr Davidson: Could we have a
note, Chairman, on how much the Duchy of Cornwall have saved during
the last year by not having paid capital gains tax and corporation
tax?
Mr Ross: We operate our business
within the tax systems which exist.
Q244 Mr Davidson: Which is that you
do not pay any.
Mr Ross: The Prince of Wales pays
income tax.
Q245 Mr Davidson: No, no, I am keeping
the Prince of Wales's money separate from the Duchy's money. I
think it is important to do that, I am sure you would agree. You
do not pay corporation tax or capital gains tax, I am asking if
you could clarify for us how much that would have cost you if
you had been paying it. How much is the value of this tax avoidance
worth?
Mr Ross: I am not in a position
to be able to tell you that.
Q246 Mr Davidson: Sorry? You do not
know or will not tell?
Mr Ross: We do not have the information
about base values.
Q247 Mr Davidson: If next year it
was decided you were going to pay tax, are you telling us you
could not possibly calculate how much tax you should pay?
Mr Ross: If you do not have a
tax system, it is quite hard to make the calculations on base
values.
Q248 Mr Davidson: So you cannot calculate
it. So an estimate of £40 million might very well be accurate,
so effectively you are receiving a £40 million subsidy from
the taxpayer as a result of not paying tax. That figure is just
as accurate as any other estimate?
Mr Ross: You could say any figure,
you could say £5 million, you could say £100 million,
I do not think it bears any relevance. You people have picked
some figures up on a loose calculation, I do not really think
it is my decision to haggle.
Q249 Mr Davidson: No, but you mentioned
between £5-100 million there, you know the estate better
than I do, you are running it, you must have come to some conclusion.
I wonder if you can possibly give us a note which might assist
us to value the tax exemption your estate receives because it
may be we want to take that into account in formulating our recommendation;
is that possible? I want to be clear, when you say you do not
want to do it, is this a "don't want" or just simply
"can't" because if it is a "can't" it calls
into question, I would have thought, the competence of the operation.
Mr Ross: At the moment, the capital
gains means you have a gain from here to here.
Q250 Mr Davidson: Yes, I understand
that.
Mr Ross: We have no base lines.
I do not whether you would make a conjecture for us whether the
base line is on 1992 figures or on—
Q251 Mr Davidson: That is a "won't
say" then really, is it not? Can I clarify your relationship
with VAT for a moment. Do you pay value added tax on anything?
Mr Ross: Yes, we do.
Q252 Mr Davidson: On everything?
Mr Willis: We operate the normal
VAT regime.
Q253 Mr Davidson: Can I turn to your
role as a property developer. The Prince of Wales has always been
pretty strong on a number of issues, ethics and so on, and sustainability.
The property in which you have invested, could any of the property
in which you have invested be described as unethical or unsustainable
in environmental terms?
Mr Ross: Possibly.
Q254 Mr Davidson: Possibly. That
is helpful.
Mr Ross: We invest in a number
of types of property.
Q255 Mr Davidson: Some of which might
be in contradiction to the express views of the Prince who chairs
the board and makes the decisions.
Mr Ross: We have to make certain
balances.
Q256 Mr Davidson: I understand that.
Mr Ross: On the capital account
and on the revenue account we are charged by a variety of procedures
to perform in a certain way. The Prince of Wales's views about
the environment and sustainability are very strongly felt. If
it is on our own land, which indeed we are doing at Poundbury,
those standards which you are referring to are very highly followed.
If it is on land that we have acquired or for some reason is in
our possession for historical reasons that is going to be redeveloped,
what is there already may not be in our control.
Q257 Mr Davidson: You have been there
forever so presumably—
Mr Ross: Some of these buildings
were put in place before the Prince of Wales was around.
Q258 Mr Davidson: You have the option
to sell them, of course, notwithstanding the fact that you do
not have base values, you have the option to sell them?
Mr Ross: These are the commercial
criteria.
Q259 Mr Davidson: I understand that
but the point I am saying is given that the Prince has expressed
very strong views on this I do find it surprising you cannot give
us an assurance that all the property owned by the Duchy, none
of it can be described as unethical or unsustainable in environmental
terms. It seems to me that there is one rule the Prince would
wish to apply to others but one rule that he applies to his own
investments.
Mr Ross: We try to influence this
in two ways. One, by setting an example and, two, by being involved
with the people who occupy those properties to whom we let, by
showing the benefits. The thing which we try to point out is that
good practice and sustainability and commercial can come together.
It is a gradual process.
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