I have been instructed to prepare Wills for a married couple, the husband being a prominent British artist. He has a substantial collection of his own work, which I understand may qualify for IHT relief in the same (or similar) way as BPR/APR. Could members please confirm whether this is in fact the case and, if so, point me in the right direction for a suitable precedent?
I have no direct experience of dealing with artists so take my comments with a little pinch of salt but in principle I see no reason why BPR could not be available.
A key issue will be, of course, whether as a matter of fact the artist is actually conducting a business in the exercise of a profession/vocation; compare the “badges” of trade. Are all his paintings shown as stock in his accounts; are all his paintings available for sale; has he made profits over time (or mainly losses).
No doubt others will offer a more satisfactory response.
Malcolm Finney
Agree with Malcolm points,
Is it a Company or self-employed? Id suggest BPR and especially APR are a case by case basis, HMRC may chose to challange either. And often do.
Broadly, the paintings are “stock”? So therefore quailify? - is this the argument.
If so, HMRC will look at cash in a business and stock to ensure the owner has not tried to bypass IHT. Stock levels ought to have some relation to the T/O of the business.
Richard Bishop
PFEP
Let’s assume the profession/vocation is continuing.
The paintings would be stock in trade valued at the lower of cost and net realisable value. Cost would be almost negligible. In my view the unsold paintings would qualify for IHT BPR.
However if the artist retires the unsold paintings are no longer a business asset as the ‘business’ has ceased. In my view BPR would not be available. The paintings would be included in an IHT account at market value.
The phrase " … a substantial collection of his own work …" might suggest that these paintings are no longer business assets (i.e. stock in trade) and would therefore not qualify for BPR.
Hi Richard
Self employed not a company. It’s definitely stock in trade whilst he remains active, which he currently is, very
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Dan Attfield MSWW MSEPP
Director
The Will & Trust Company Ltd (incorporating Phoenix Wills Services Ltd)
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Taking Malcolm and Gerry’s points I’d suggest BPR is available.
We use Parkers Will Precedents - full range of BPR trusts for incorporation into a will.
Richard Bishop
PFEP