Do Paintings Used In House Openings Qualify As Plant
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extremely interesting case has come before the
First-tier Tribunal (FTT) – The Executors
of Lord Howard of Henderskelfe (deceased)  (TC 1340).
taxpayers were the executors of Lord Howard of
Henderskelfe who died in November 1984. Lord Howard had lived at Castle
which was owned by the Castle Howard Estate Ltd. Lord Howard had owned
works of art that the company were allowed to use for exhibition in the
the house open to the public. Under an agreement, the company paid for
costs of insurance, restoration and security.
2001/02, the executors sold a painting used by
the company for £9.4 million. The gain was included on the taxpayers’
estate tax return as a chargeable gain.
painting was clearly not employed in a trade,
profession or vocation carried on by the executors.
executors later tried to amend the return to state
the gain on the painting was exempt from capital gains tax by virtue of
1992, s 45. The executors claimed it was a gain on the disposal of
moveable property, which was plant and therefore a wasting asset under
44(1)(c). HMRC disagreed, so the taxpayers appealed to the FTT.
the question of whether the painting would have
qualified as plant in the trade of “house opening” was not looked at,
review of the construction of TCGA 1992 s 44(1)(c) would lead to the
that the owner has to employ the painting in a trade, profession or
on by him.
FTT decided that the painting had been loaned to
the company on an informal basis and could be removed by the taxpayers
time. The painting was not hired by the company. There was no reason to
describe the painting as a wasting asset. The executors did not have a
business, and for the painting to be considered plant it would have to
by a business or held on a formal lease.
was decided that the painting was not exempt from
capital gains tax. The
question was not asked as to whether the painting
was part of the setting and therefore was not eligible to qualify as
under the function test.
are many who feel that a close examination of
the house opening business is required and the question of what is
setting/premises and what is plant. For example, in Shove
v Lingfield Park 1991 Ltd  STC 805 the Court of Appeal
held that an artificial all-weather race track was not plant.
About the Author
Supplied by Julie
Butler F.C.A. Butler
& Co, Bennett House,
The Dean, Alresford, Hampshire, SO24 9BH.
Tel: 01962 735544. Email; firstname.lastname@example.org,
the author of Tax Planning for Farm and Land Diversification (Bloomsbury Professional), Equine
ISBN: 0406966540, and the forthcoming Stanley:
Taxation of Farmers and Landowners (LexisNexis)
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Article Published/Sorted/Amended on Scopulus 2012-04-11 13:38:28 in Tax Articles