No escaping inheritance tax on this exemption scheme

Josh Spero’s piece on how the British public is being prevented from seeing tax-exempt artworks, including Picassos, because of an out-of-date tax database (Report, August 9) quotes HM Revenue & Customs’ estimate of the cost of the tax relief under the exemption of works of art scheme, making reference to objects “escaping” inheritance tax. But as the piece correctly states, the relief is a “conditional” exemption meaning that if an artwork is sold or public access withdrawn the Treasury not only recoups the tax deferred, but the charge is based on current market values. It is not clear from the figure quoted for the cost to the Treasury whether this is a net cost — ie one that also takes into account tax receipts over the same period from sales of conditionally exempt artworks.

Typically this would include not only the deferred inheritance tax but also capital gains tax.

Wendy Philips
Tennant McQuillan (Cultural Property Advice), London WC1, UK