Chattels may be offered in lieu of inheritance tax or other death duties, if they are considered to be of pre-eminent national interest or associated with a building of outstanding historical or architectural interest. The Heritage & Taxation Advisory Service has 40 years experience of assisting in these highly specialized transactions.

It is sometimes possible that an item offered in lieu of tax continues to remain in situ, even though the building is in private ownership, where that building is open to the public.

This Scheme started in April 2013, so gives a comparatively new opportunity for tax planning. The Scheme seeks to encourage philanthropy by offering donors to certain national institutions a tax credit, typically of 30%, of the value of the work of art they donate.

The tax credit may then be applied against the donor’s income or capital gains tax liabilities, or in the case of a company against a corporation tax liability. The tax credit can be used in the year of donation, or otherwise spread over the following five tax years. The Cultural Gifts Scheme offers a new opportunity for tax planning with works of art and the Heritage & Taxation Advisory Service would be delighted to discuss it with you.

Sales to public museums, galleries, local authorities, the National Trust, the National Arts Collections and The Historic Churches Preservation Trust, or other institutions of works of art and objects which are pre-eminent for their national, scientific, historic or artistic interest, can secure valuable tax advantages for their seller. The Government effectively offers an inducement, usually equivalent to 25% of the taxation that would become due on a sale of the chattel on the open market. The Heritage & Taxation Advisory Service has a long and successful history of completing such transactions.

Exemptions from capital gains tax and inheritance tax in relation to chattels and land are, in reality, a deferral of tax on certain conditions being met throughout the period of tax deferral. Since 1998, these conditions have required greater public access to the exempt items.

Whilst this whole area of taxation has become more complex and even arcane, it remains possible to defer capital taxes if the chattel is either of pre-eminent quality or is historically associated with a building of outstanding architectural or historical interest. Such deferral also extends to buildings and land which are of outstanding architectural, historic, scientific, scenic or amenity interest.

The Heritage & Taxation Advisory Service has extensive experience in advising clients in this area, including the likelihood of exemption being available, the procedures to obtain it and the conditions likely to be attached to it.

The Heritage & Taxation Advisory Service is able to assist clients and their professional advisers in matters relating to the creation and continued qualification of charities for the preservation and conservation of important collections, houses and gardens. We can assist clients in considering the advantages, conditions and administrative requirements of such charities which must not only preserve and conserve but be for the advancement of education and/or provide a benefit to the public.

Prior to sale at auction or by private treaty, the Heritage & Taxation Advisory Service can advise on the capital gains tax liability which may arise on sale, though final liabilities will only be known after the sale has taken place.

Following a sale at auction through Christie's, the Heritage & Taxation Advisory Service can provide (in conjunction with the appropriate specialist departments) valuations at March 1982 and other appropriate acquisition dates. The Service can also assist with negotiations with H M Revenue & Customs on these valuations, if the need arises.

In conjunction with the appropriate specialist department, the Heritage & Taxation Advisory Service can provide valuations of chattels for inheritance tax, or capital gains tax arising as a result of death or transactions in lifetime. It can also provide valuations to trustees for transactions giving rise to a tax charge and for clients who are caught by the pre-owned asset charge to income tax. The Service can also provide advice and assist with negotiations if the valuations are challenged by H M Revenue & Customs.

This can arise under a number of circumstances. Among the most common is where the donor gives away chattels to the donee, but wishes to continue to retain use of them. To achieve a potential inheritance tax saving, it is necessary for the donor to be able to show that he has paid the donee full consideration for the continued use of the chattels. The Heritage & Taxation Advisory Service is able to advise on the terms of the lease and to represent either the lessor or lessee in negotiating the market rent and/or arrangements where the rent is capitalized.

A lease may also be put in place in other circumstances including where the chattels are owned through an offshore structure or charities. Different tax considerations apply here. The Service is able to provide guidance in conjunction with the appropriate specialist departments within Christie's.

The loss of a chattel can be devastating for the owner from a personal and financial point of view. Tax consequences can arise from the loss whether by theft or otherwise. The Heritage & Taxation Advisory Service can assist clients and their professional advisers in connection with the tax consequences arising from such a loss.

A Maintenance Fund (a form of trust) can be established to support land and chattels which meet their respective qualifying criteria. Land and buildings must be of outstanding architectural, historic, scientific, scenic or amenity interest. Chattels must be historically associated with a building of outstanding architectural or historical interest. Such Funds attract concessionary tax treatment in respect of capital arising from the trust assets which are used to support the qualifying chattels or land.

The Heritage & Taxation Advisory Service is able to assist clients and their professional advisers in considering the advantages and conditions attaching to the establishment of such Funds.