Late on Thursday night, on the recruitment website RetailChoice, a new opening was advertised at a mail-order firm near Reading. At first glance the job, for an “assistant buyer” to “develop the personality of the Party Pieces brand… through product selection, photography and catalogue design,” seemed as ordinary as all the others listed with it – a contracts manager in Hungerford, an accounts assistant in Newbury. Shades of Berkshire’s most famous office worker, David Brent, hung lightly in the air.
But for the current postholder, a woman named Kate Middleton, this job has proved a spectacular career springboard. The vacancy occurs because she has just been promoted from retail buying assistant to future Queen of England.
And it is Party Pieces, the Middleton family business, which is widely credited with putting her on that road.
In a thousand newspaper accounts, this online retailer of children’s party accessories, founded by Kate’s parents, Michael and Carole, is said to have lifted the Middletons from relative financial modesty to “multi-millionairedom”, in turn funding their daughter’s education at elite private schools, propelling her into a new social sphere, and giving her the confidence and affluence to win a Prince. But is the real story more complicated?
By most standards Michael and Carole Middleton, and their three children, are prosperous, even rich. They have a million-pound house, with vines, oak trees and wisteria, in a classic upper-middle-class Berkshire village.
In 2002, they spent £780,000 – the equivalent of about £1.2 million today – to buy their eldest daughter a flat in Chelsea. They paid cash; Land Registry records show there is no mortgage on the property. In 2005, they bought several acres of land near their home – for £295,000, again in cash, and without a mortgage.
They holiday en famille in Mustique, where a five-bedroom villa costs £20,000 to rent for a week, and in Scotland, in a house costing £5,000 a week. Kate and her younger siblings Pippa, 27, and James, 23, all went to prep schools and Marlborough College, where the basic fees then ranged from £13,000 to £19,000 a year; the three children’s education cannot have left much change from half a million.
There is even a racehorse. Industry sources say that Carole and Michael have a share in a good sprinter named Sohraab, which has run at Royal Ascot for the past two years and, last month, in the prestigious Prix de L’Abbaye, part of the Breeders’ Cup Challenge. Carole Middleton was at Longchamp racecourse to see her horse finish well down the field.
Party Pieces was founded in 1987, taking the Middletons from their modest semi-detached house and their purely salaried existence – she was a flight attendant, he a British Airways dispatcher – to all this.
Yet is it plausible that this sort of wealth can alone have come from selling balloons and paper plates in a business whose most expensive product – a fairy costume – is £49.99? Perhaps, if you sell enough.
But by 2005, 18 years after the company began, 10 years after the Middletons moved into their current home, and long after Kate had left Marlborough, Party Pieces was still taking the comparatively modest total of “more than a thousand orders a week,” according to an advert they placed offering to sell their mailing list.
“There are loads of companies like them,” says Sue Fenton, editor of the industry’s trade journal, Progressive Party. “They don’t stand out as a big player and I wouldn’t have thought they’d make masses of money. You’re looking at things costing 50p, 75p. You have to sell a lot of that to make money and there’s a lot of competition.”
Accounts for one of Party Pieces’ major competitors show profits of only around £130,000 a year – and this in a business which is said to be larger than the Middletons’.
What we know of Party Pieces suggests a fairly small business. It operates from a converted barn and its website says it has “up to eight” staff taking orders, plus pickers in its warehouse. Carl Taylor, sales director at one of the major party goods wholesalers, Pam’s, says: “They’re big enough for me to know the account, but I would say they were quite small.”
Normally, it’s relatively easy to find what a business is worth if the business is registered as a company. Even the smallest companies must lodge accounts at Companies House.
But fascinatingly, while Party Pieces has two shell companies with no money passing through, the main business is held not as a company, but as a partnership – and doesn’t have to file any information. This doesn’t seem to have been done to stop journalists poking around; it was the case long before Kate became famous.
Though not unprecedented, a partnership is not the usual way of holding a business of Party Pieces’ size and nature, because it carries huge risks for the partners.
In a company, the most you can lose is the amount you’ve invested – but partnerships have unlimited liability.
If Party Pieces ever got into trouble, its creditors could take everything the Middletons have. There is no suggestion at all that the firm is in trouble – indeed, all its suppliers tell us it is quick to pay its bills. But the party industry figures we’ve spoken to all admit that the trade has been hit by the recession.
Why take this sort of risk? It could simply be because that is how the Middletons, like a lot of two-person bands, started, and they never bothered changing it as the company grew. But the presence of the two shell companies makes this look unlikely. Several accountants suggest that it could be a form of (entirely legal) tax avoidance.
“Before the top rate of income tax went up, it used to be better to be a partnership than a company, particularly if your profits were low,” says Mike Warburton, of Grant Thornton. Although partners’ profits are subject to income tax, which is charged at a higher rate than corporation tax, partnerships make substantial savings on employees’ National Insurance contributions. They also avoid the tax that is payable when they take money out of a company.
Most interesting of all, you can structure the partnership so it minimises your tax, and you don’t have to say who the partners are.
“If you got your adult children in as partners, and spread the profits out, that would be a smart move,” says Mr Warburton. “Or you could make one of the partners an offshore limited company that doesn’t have to file accounts. That’s another possible way of avoiding tax.” The partners have some scope about allocating the profits – so if some were allocated to any offshore company, there might be relatively little British tax payable.
The Daily Telegraph asked the Middletons, through their lawyer and Party Pieces, whether Kate or the other children were partners in the business. We also asked whether the decision to hold Party Pieces as a partnership was done for tax reasons.
A spokesman said: “Party Pieces is a private business and you will therefore understand that we will not be responding to the various questions you have asked.”
The spokesman also declined to answer questions about Party Pieces’ turnover and profits.
If the Middletons are engaged in tax avoidance, which of course is perfectly proper and legal, that may go some way to explain how they can maintain their standard of living. Or it may be even simpler – that they have worked very hard, invested wisely, paid tax in the normal way, and made enough to support a lifestyle which, while comfortable, is obviously not oligarch-standard.
There may, of course, be other explanations, involving aspects of their lives that we do not know.
Kate’s biographer, Claudia Joseph, has suggested that some inherited wealth on Mr Middleton’s side of the family played a part. In fact, this appears to be a red herring. Kate’s paternal relatives were prosperous merchants in 19th-century Leeds and it has been reported that her paternal grandfather, Peter, inherited the then equivalent of £1.3 million in 1951.
Probate records show, however, that it was £19,500 – the then equivalent of £480,000 – of which Peter Middleton’s share was only a quarter. Indeed, if Carole and Michael had inherited any wealth, they would probably have lived less modestly in their early married lives.
Carole Middleton’s past as the granddaughter of manual workers has sometimes been held against her. In fact, of course, it counts wholly in her favour. She and her husband represent the kind of honest self-advancement through enterprise and work that the country needs more of.
But the mysteries of the Middletons’ money are yet to be fully explored.