Acceptance in Lieu Scheme
During the current period of social quarantine, HM Revenue & Customs continues to function as normal (or as closely as possible to normal as remote working permits). Offers of works of art and cultural property in lieu of Inheritance Tax under the AIL Scheme can continue to be made as usual. Indeed, the AIL Scheme may be more attractive than ever during the quarantine period when the logistics of access to and transport of works of art to salerooms or for exhibition overseas may be challenging. On an offer in lieu of tax, the immediate suspension of interest on an IHT liability will continue to apply from the moment an offer in lieu of tax is registered with HMRC, subject as always to the eventual acceptance of the offer.
In order for an offer under the AIL Scheme to be registered with HMRC, an offeror is required to provide three key pieces of information: the identity of the offeror and capacity in which s/he is making the offer; a description and valuation of the object being offered; and a note of any wish or condition as to the eventual allocation of the object, i.e. which museum will receive the object should the offer be accepted. In the current circumstances it may not be possible for an offeror to provide the usual level of detail, such as the full provenance and publication history of the object, or to photograph the object to the required standard of resolution. For the time being HMRC will be supportive of receiving requests for temporary relaxation of these requirements, so long as the minimum information listed above can be supplied. This in fact is very little different to normal.
While HMRC continues to function, unsurprisingly delays are likely to ensue in the current period because the AIL Scheme relies on its advisers personally inspecting the objects offered – and the objects may temporarily be inaccessible. The AIL Panel of Arts Council England Panel advises HMRC on whether objects offers in lieu of tax are capable of acceptance under the AIL Scheme, and at the time of writing the Panel has not advised that its function will be suspended during the quarantine period. For offers in lieu, therefore, it is “business as usual” – and business may prove to be brisker than ever.
Public access and conditional exemption for heritage property
Many owners of heritage property have agreed to public access arrangements for their works of art in return for being granted conditional exemption from Inheritance Tax. That public access might be achieved through display in their own homes if they are opened to the public, or through loans to museums and galleries in the UK, or other institutions such as the National Trust. Heritage Section at HMRC have been swift to allay any concerns as to a potential breach of those public access obligations during the Covid 19 crisis and have issued the following notice:
‘Closing or delaying the opening of your property
You should follow Public Health England’s social distancing guidance if you are the owner of a national heritage property.
We will not consider that you have broken your agreement with us if you are an owner of a national heritage property who closes it, or delays its opening to later in 2020. This will apply even if it means you will miss some of the period covered by your agreement, or you do not open at all in 2020.
If the situation improves we will expect your property to be open later in the year to make up for any lost days, if possible. We would not expect additional open days next year to make up for those missed in 2020
Objects on loan to other organisations that close due to government advice
If a conditionally exempted object is on loan to a museum, gallery or other venue which closes we will not treat the withdrawal of public access to the object as if you have broken your agreement with us.
This will apply even if it means the object is not on show at all in 2020.
Objects that can only be seen by appointment
If an object can only be seen by appointment then we will not expect you to agree to an appointment until the government’s advice changes, and you will not have broken your agreement with us’.