When is a painting not a painting?
March 19 2013
Picture: Telegraph
Answer; when it's a piece of 'machinery'. The trustees of Castle Howard, above, have won an important case on UK tax law, concerning the sale in 2001 of Sir Joshua Reynolds' Omai, which will have an impact on the disposal of pictures from stately homes. From The Telegraph:
The proceeds of the sale, part of the estate of the late Sir George Howard, have since been the focus of negotiations over whether capital gains tax should be paid.
Executors had argued is was one of the main attractions bringing visitors to Castle Howard, in North Yorkshire, and should be viewed as integral to running the house as a business.
On Monday, Mr Justice Morgan ruled the painting did fall into the category of "plant and machinery" as defined by the Taxation of Chargeable Gains Act 1992.
In a move likely to bring hope to other stately home owners, this classification makes it exempt from the tax levy.
The judge's ruling, at the Upper Tribunal, found the artwork should be viewed as a piece of "apparatus" and a "wasting asset" that, at least in theory, became worthless 50 years after it was placed on public display in the 1950s.
Personally, I'm always pleased to see the tax man lose. But on a wider scale this is also good news for the public too. From now on, there will be a clearer incentive, for those fortunate enough to own great paintings in great houses, to put important works of art on public display as much as possible. They might even be encouraged to loan them out more.
Update: top tip for anyone wanting to sell their art and avoid capital gains tax - turn your living room into a 'museum' for a few years before you sell.
