Please note that the following if for information only.
It is not tax advice.
If you need tax advice consult an accountant or other tax professional.
The case for the IR to look at
Commissioning / buying art work:
“Plant” allowances, the question of:
- On tax and pictures, including prints, generally, it is accepted that capital allowances can be claimed, which give relief at 25% of the cost, annually, on a writing-down basis – you probably knew that.
- Where the painting etc. contributes to the ambience of the business premises and it is part of the trade of the company/business to provide such an ambience – e.g. a reception area or restaurant or a hotel where customers come because they particularly appreciate the surroundings.
- In contrast, and this is quoting from the Inland Revenue manual so has a certain bias to it, a painting in an accountant’s office will not qualify as selling atmosphere is not part of an accountant’s business.
- It is a debatable point as to whether the display of a painting in the boardroom of a shipping company falls on the ‘right side’ of the allow ability line – some are inclined to think not – but that is where the debate lies.
- The painting would be an ‘enduring’ asset of the business and there seems no reason why its cost should be immediately written off other than, possibly, on de minim is grounds.
“Expensed”, the further question of whether the cost of the painting can be.
- The paragraph above deals with and leaves unanswered, expenses.
- Many people are unaware of any relief.
- It depends on use of asset, e.g. pr or reception room, latter is probably ok.
- Probably allowable if on public view.
- Expenses of production are claimable as costs rather than the painting e.g. the artist’s travel and accommodation, materials, postage etc.
- That is: Payment to do something e.g. travel/research client pays = deductible to achieve the asset (e.g. car, flights etc).
- Every case is slightly different you will need to show the connection.
For example a shipping company or marine engineer could be expected to have paintings of its ships as might a business with a theme that relates to the paintings and vice versa.
The above has been produced with the kind assistance of Michael R and a senior and well-disposed tax inspector who wish to remain unattributed.
We would be very pleased to have / induce someone else to add a comment –
It will be interesting to see how this discussion evolves.
Practical examples are usually the most helpful.
If in doubt, the golden rules seem to be:
If in doubt, in GB and the EU speak to your accountant and the I.R. to ensure correct guidance is given.
Beyond, different rules will apply.
Gordon Frickers, 2005
“There is no such thing as a good tax.”
“I’m proud to pay taxes in the United States; the only thing is I could be just as proud for half the money.”
“There’s nothing wrong with the younger generation that becoming taxpayers won’t cure.”
“Not one cent should be raised unless it is in accord with the law.”
“Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury.
There is not even a patriotic duty to increase one’s taxes.
Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible.
Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.”
(US Appeals Court Justice the Honourable Learned Hand)
“The only difference between a taxman and a taxidermist is that the taxidermist leaves the skin.”
Don’t feel bad about tax efficiency, because you have the law on your side!
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Gordon Frickers © updated 26.10.2020