Prince Charles’s Duchy Originals has been forced to buy back shares from his charitable foundation to avoid leaving the charity out of pocket after a change in the rules around Gift Aid.
The company, which sells biscuits, sausages and soup exclusively through up-market grocer Waitrose, increased profits by 2% to £3m as royalties from the sale of its products rose by 2.2% to £3.15m.
Duchy Originals gives its entire profit to Prince Charles’s charitable foundation, which hands out grants to good causes including environmental, conservation, arts and health projects.
But this year, the charity had to hand back £1.8m after changes in guidance by accountancy watchdog ICAEW around donations from charities trading subsidiaries which came out last year. The donations, made under company Gift Aid rules, are offset against tax.
The ICAEW guidance clarified that it was illegal for a company to hand over charitable donations worth more than its profits available for distribution under accounting rules. As a result of the technical ruling, a number of charities who receive funds from trading divisions may have to hand back a proportion of those donations.
A spokeswoman for the Prince of Wales Charitable Foundation said the charity had not lost out this year because the reversal of Gift Aid payments made by Duchy Originals had been offset by the repurchase of shares from the charity.
Duchy Originals was first launched by the Prince of Wales in 1990 with a stated aim that every product “is good, does good and tastes good”.
Sales were hit after the financial crash in 2008 when there was an abrupt fall in demand for all organic produce and the company slumped into the red.
But in 2010, Waitrose took on the exclusive right to originate, promote and distribute Duchy Originals in the UK and elsewhere helping to return the brand to profitability.
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