Outcry over royal warrant handed to foreign-owned firms ‘who legally avoid paying tax’
The Queen’s jeweller has not paid corporation tax in five years, it is claimed, despite reported profits of £66million
Demands are growing for a review of the royal warrant system after firms supplying the monarchy were criticised for moving profits overseas.
The crest is a mark of British craftsmanship and worth around £4.5billion to its 816 recipients – but many of the holders are now foreign-owned.
It is claimed the Queen ’s jeweller Mappin & Webb has not paid corporation tax in five years, despite a reported profit of £66million.
A TV inquiry on Monday night says firms legally avoid tax by shifting profits to tax havens as inter-group loans.
Mappin & Webb’s US parent company said no corporation tax had been paid for five years because of investment in the business and “historical losses”.
Other luxury brands which supply the Royals including Burberry, Hunter, Parker Pens, Twinings and Bendicks closed their UK production teams and moved to cheaper overseas locations.
A leading tax academic says the empire of companies operate a complex structure which avoids paying tax by shifting profits – completely legally – to tax havens in the form of inter-group loans.
Prem Sikka, professor of accountancy at the University of Essex, said: “This is a classic example of a company being loaded with debt and sucking all the profits out with interest payments.
“What is unusual is that this company is actually trading on Britishness.
“They are making profits by claiming to be British and they are enjoying the patronage of the head of the state.
“They use our education , healthcare, transport, legal system and security to generate profits but have gone to considerable lengths to create corporate structures and transactions which enable them to avoid UK taxes.
“There should be a backlash and their royal warrants should be withdrawn. People should boycott the companies.”
Prof Sikka is calling on the Government to stop the tax deductability of all inter-group loans.
Shadow leader of the House Chris Bryant tells Channel Four’s Dispatches programme: “The whole point of a royal warrant is it’s a kind of statement of British satisfaction and it must add phenomenal value to a brand especially overseas in markets like China, the Far East , the Middle East .”
He added: “I think that it should underline modern British values and that means it should be a company that pays taxes in this country, employs people in this country, does most of its business in this country.”
Mr Bryant called for an overhaul of the system, which is estimated by city firm Brand Finance to be worth £4.5 billion to the companies that benefit from it.
The Channel Four programme is due to reveal many warrant holders have parent companies in tax havens and have moved hundreds of manufacturing jobs overseas.
Graham Smith, of campaign group Republic, said: “We’ve long seen the warrants system as arcane and entirely misplaced in a democratic society.
“It smacks of royal patronage and favours granted in exchange for goods and services.
“We need complete transparency over why companies have been granted warrants.”
Aurum said in a statement: “Mappin & Webb are incredibly proud to be a royal warrant holder and accordingly act transparently and responsibly in all our tax affairs.
“Mappin & Webb and the Aurum group are fully resident in the UK for tax purposes and always have been.
“The Aurum group has not been in a position to pay taxes over the past five years largely due to trading conditions, investment in the business and historical losses.
“The group is expected to have utilised its historical losses at the end of the current fiscal year.”
