Prince Charles' charitable foundation has been forced to return £1.8m (€2.5m, $2.7m) it received from Duchy Originals, an organic food brand owned by the prince. The move follows changes in guidance introduced by accountancy watchdog ICAEW around donations from charities trading subsidiaries, which are in general offset against tax under company Gift Aid rules.

The Guardian reported that according to ICAEW guidance, it is illegal for a company to make charitable donations more than the profits it has available for distribution to shareholders. This technical ruling will force many charities who receive donations from trading divisions to a return a portion of it.

The Prince of Wales Charitable Foundation said the donations made by Duchy had been offset by the repurchase of shares from the charity, hence enabling it not to lose out. This forced buy back will avoid leaving the charity out of pocket.

In 1990, the Prince of Wales launched Duchy Originals with a stated aim that every product "is good, does good and tastes good". The 2008 financial crisis saw its sales tumble as there was an abrupt decline in demand for organic products, forcing the company into losses.

However, in 2010, up-market grocer Waitrose took an exclusive right to originate, promote and distribute Duchy Originals products in the country and elsewhere. This helped the organic produce company to rebound to profits.

Duchy, which sells biscuits, sausages and soup exclusively through Waitrose, gives its entire profit to Prince Charles's charitable foundation, which in turn uses these funds to finance good projects in the environmental, conservation, arts and health domains.

Charity organisations recently felt the public wrath after a Times report revealed that more than a thousand people employed across various charities in the UK were getting paid an annual remuneration that runs into six figures.