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The cultural gifts scheme: a new incentive for philanthropists?

As part of a policy to encourage philanthropy generally and specifically to give continuing support for the arts, the Government's 2011 Budget introduced proposals for a 'Cultural Gifts Scheme' to give a tax reduction to individuals or companies that donate girls of pre-eminent works of art to the nation. This article considers the background context to that legislation, considers its operations and implications from a technical point of view, and reviews its likely effectiveness in achieving its objectives.

BACKGROUND

On Budget Day 2011 HM Revenue & Customs (HMRC) announced a new tax reduction for donations of works of art to the nation, to be known as the 'Cultural Gifts Scheme' or CGS. The Budget Day announcement was followed by detailed proposals issued on 29th June 2011 to which contributions were invited. After the consultation period closed on 21st September, the response to the consultation paper and draft legislation were released on 6th December 2011 and the intention is that CGS will take effect from 6th April 2012.

Initially limited to individuals in its application, the current draft legislation has widened the opportunity to claim the reduction to include corporations. CGS offers donors, whether individuals or companies, the opportunity to reduce income tax, capital gains tax or corporation tax liabilities through the gift of pre-eminent works of art to the nation. The rate of reduction will be 30 per cent of the agreed gross value of the object for individuals and 20 per cent for companies. For this purpose the definition of a company is as provided in section 992 of the Income Tax Act 2007.

CGS is part of a package of measures introduced in the 2011 Budget which are designed to encourage philanthropy. Ultimately it stems from ideas put forward in a report from a review chaired by Sir Nicholas Goodison and published as the Goodison Review (Securing the Best for our Museums: Private Giving and Government Support), in January 2004. (1) The Goodison Review was issued after a consultation period to which interested parties contributed. The stated objective of the Goodison Review was:
   to review the effectiveness and efficiency of support to regional
   and national museums and galleries to help them acquire works of
   art and culture of distinction that might otherwise be sold abroad
   and to make those items accessible to the public.


However, it was not limited to items requiring export licences only and in its final form the Goodison Review examined the method of funding acquisitions generally, their display and the encouragement of private individuals to engage in the support of culture. The Review was welcomed by the Museums Association (2) in that it included a review of funding as well as taxation and it recognised that the two could not be separated, since to take advantage of tax-efficient methods of acquisition, such as private treaty sales, often requires museums to raise additional sums of money.

In the seven years between the publication of the Goodison Review and the proposals for CGS, funding for the arts has become progressively more difficult and the flow of objects leaving the United Kingdom has increased; at the same time, the commercial art world has witnessed significant growth, so that acquisitions by cultural institutions are significantly harder to achieve. The Goodison Review recognised that a life-time relief for donations of works of art would be essential to support museums with implementing their acquisition policies and that the existing schemes did not give donors relief against income or capital gains tax. Despite the support of the arts bodies and the recommendation of the Treasury, the proposals in the Goodison Review were not implemented but its principles lived on.

In January 2005, The Art Fund took up the cause and recommended an extension of the gift aid scheme in a 'Living and Giving' proposal (3) that it submitted to the then-Chancellor Gordon Brown and to a cross-party group of MPs, comprising the Culture, Media and Sport Select Committee. The Select Committee's recommendation (4) was that the existing gift aid scheme should allow for income tax relief for donations of significant works of art to public collections. This proposal was also not implemented, but with the election of the Coalition Government in May 2010, the time was right for re-examination of the possible tax incentives for support to the arts.

After such a long gestation period, the reconsideration has coincided with the incentives for philanthropy and the encouragement of the well-publicised ambition for a 'Big Society'. Aside from the political agenda, CGS will also be of considerable interest to supporters of the arts and those who are philanthropically inclined, giving an opportunity to reduce tax and support the arts simultaneously.

SCOPE OF THE SCHEME

In its operation, CGS will adopt many of the features of the existing offer in lieu system for the satisfaction of inheritance tax, as set out in section 230 Inheritance Tax Act 1984, commonly known as the acceptance in lieu scheme or the 'AIL' scheme. There will, nevertheless, be some significant differences between the two co-existing schemes, the most important being as follows:

* CGS will give a reduction in income tax and capital gains tax owed by individuals during their lifetime and up to the agreed maximum percentage of the gross value of the object offered;

* CGS will be open to use by companies and lead to a reduction of corporation tax liabilities, including corporation tax on capital gains; but

* CGS will not be available to trustees, personal representatives or joint owners of property, even if the object would otherwise satisfy the necessary conditions for an offer; (5) and

* Under CGS it will not be possible to have a 'hybrid' offer, such as currently exists under AIL, whereby part of an offer is settled by the tax reduction and the rest by a payment to the offeror and made by an institution, often following a fund-raising campaign for the acquisition. (6) There will also be no tax 'douceur' or inducement available to offerors for any offer made under CGS.

* The CGS tax reduction will be available only against UK tax liabilities, and the objects which are offered cannot comprise land or buildings. In its application, CGS will be slightly narrower in the class of qualifying donors and will be specifically linked to the donation of chattels. By contrast, the existing gift aid scheme for the relief of income tax excludes donations of chattels; and the AIL scheme allows any taxpayer to satisfy an inheritance tax or estate duty liability on any chargeable event by offering land and buildings, as well as chattels, to recognised cultural institutions or bodies.

OPERATION AND PROCEDURES

To claim a tax reduction under CGS, the offeror or potential donor, whether an individual or a company, must make a qualifying gift, defined as:
   [the offer of] pre-eminent property to be held for the benefit of
   the public or the nation ... made in accordance with a scheme ...
   registered in accordance with the scheme ... and the gift is ...
   accepted. (7)


The donor must make an offer of:
   an individually pre-eminent object, or a pre-eminent collection or
   group of objects; or

   an object or collection or group of objects associated with a
   qualifying historic building; and

   be willing to donate the qualifying object or collection or group
   of objects to the nation, who will keep it/them at a qualifying
   institution, unless the object(s) are historically associated with
   a particular location, in which case they will be retained at that
   location; and

   the offer has to be registered in accordance with the scheme; and

   the offer must be accepted in whole or in part.


Offerors must follow a prescribed procedure (8) to ensure that their offer will be considered. The procedure is similar to that employed for the purposes of AIL in that offerors must:
   submit an offer in writing to the Arts Council. The offer must
   provide full details of the object to be offered. If a collection
   or group is offered, details of each object in the collection must
   be included. Photographs and a jpeg of every object should
   accompany the written details, together with a statement supporting
   the case for pre-eminence and a condition report;

   provide a valuation of the object, at open market value, ignoring
   costs of disposal, transport or professional fees incurred in
   making the offer and include supporting evidence for the valuation
   and details of who provided the valuation;

   confirm that they have and provide evidence of good legal title and
   as much information about provenance as possible (the Arts Council
   will want confirmation that there are no liens over the object or
   any risk of a claim for restitution);

   provide details of any eligible institution to which the offeror
   would wish to see the object transferred; and

   give full details of the offeror's tax office, unique taxpayer
   reference, national insurance number and consent for the Arts
   Council, the Department of Culture, Media and Sport (DCMS) and HMRC
   to exchange tax information about the offer, together with an
   interim schedule of the tax reduction and how it will be applied
   (for individuals only and only if the offeror wants to claim the
   tax reduction over five years, including the year of registration).


On receipt of the offer, the Arts Council will check that AIL the information required has been provided and, assuming that AIL the relevant information has been given, it will formally register the offer within 30 days of receipt. (9)

The CGS offer will be evaluated by the AIL Panel (whose scope will now cover CGS offers) and advice will be sought from appropriate experts. (10) The date of registration is important as this will be the effective date on which the tax reduction is deemed to apply for companies and individuals and is the date on which the valuation must be based. (11) It will therefore be essential for offerors to provide AIL the required information as soon as it is available, so that their offers are not delayed in being registered; however, registration of the offer will not imply agreement to the gross value of the object being offered or acceptance of the offer. (12) An offer will be rejected if the annual budget for the tax year, initially set at 30 million [pounds sterling] per annum, has already been reached, or if the value of the offer would or could lead to that budget being exceeded or even if other pre-eminent or historically associated objects are preferred. (13)

The period between the registration of the offer and the day on which the gift is accepted will be known as 'the negotiation period' (14) and, if there are questions over the value of the offer, this will be the period in which such negotiations over the value will take place. The Panel will also assess the nominated institution, if a wish has been expressed in the offer, taking into account the institution's collections policy, its existing holdings, level of public access given, security, environmental controls and any connection between the institution and the offeror, the owner or the creator of the work of art. (15) Assuming that the pre-eminence test and the gross offer price are agreed, the offer will be recommended for acceptance by the Arts Council. The recommendation by the Arts Council will be made to the relevant minister (16) for the offer.

If the relevant minister accepts the recommendation, a letter of acceptance will be issued to the offeror. This will confirm the terms under which the offer is accepted and will include the agreed schedule of tax reduction. The offeror will have 30 days from the date of the letter of acceptance in which to accept the agreed terms in the letter of acceptance. (17) The objects must then be delivered to the nominated institution for safekeeping for the nation. On acknowledgement of safe receipt, the tax reduction will be applied to the offeror's account at HMRC. (18)

QUALIFYING OBJECTS: THE PRE-EMINENCE TEST

The definition of pre-eminent property is based on the definition for the AIL scheme, section 31 of the Inheritance Tax Act 1984; as With objects offered under the AIL scheme, objects offered under CGS must be pre-eminent for "national, scientific, historic or artistic interest". (19) There is no restriction in the definition to the effect that the pre-eminent object should be a work of art, indeed the specific references to eligible objects include pictures, prints, books, manuscripts, works of art and scientific objects, as well as the nonspecific term, "other things".

It is also specifically stated by DCMS that works by living artists if preeminent can be offered (20) and perhaps it could be inferred that works executed by living print makers or those artists producing pre-eminent books or manuscripts may be included, presumably as well as scientific objects from current scientific endeavours, provided that they satisfy the pre-eminence test. Similarly, "other things", are not specifically defined in the draft legislation, any object may be included if it too can satisfy the pre-eminence test, either individually or as a collection or group.

There is no specific mention of archives in the draft legislation although these are now often the subject of AIL offers. Nevertheless, in the guidance issued by DCMS, there is assistance to offerors in framing an offer of archives, referring to the notes to the AIL scheme (21) and archives should be within the definition of "other things", if they cannot come under the definition of manuscripts or books.

"National interest" in this context refers to any part of the United Kingdom, (22) but an object can be pre-eminent if it has a significant association with a particular place. In considering whether an object qualifies as preeminent, the final decision rests with the relevant minister, but only on the recommendation of the Panel. (23) Nevertheless, in practice objects or collections may be pre-eminent if they have an especially close association with our history and national life; or are of especial artistic or art-historical interest; or are of especial importance for the study of some particular form of art learning or history; or have an especially close association with a particular historic setting. In the responses to the consultation period issued on 6th December 2011, it was confirmed that there will be guidance to make it clear that objects can be deemed pre-eminent in a local or regional context. (24)

In the consultation process, comment was sought on which body would be the most appropriate to assess the pre-eminence of objects and it was recognised that the Panel appointed to assess an object for AIL purposes would be best suited to this task. The claim for pre-eminence must include a statement giving the grounds on which it is made, specifying why the object is thought to be pre-eminent. For many claimants it will be necessary to engage the services of an art historian or recognised specialist for the relevant object to support the claim; whilst this may be more important where the claim is based on the object's importance in a local context, each case will be considered on its own merits.

The Panel will reject an offer where it assesses the objects as not pre-eminent or not clearly associated with an historic building. (25)

THE 'RELEVANT MINISTER'

Following an examination by the Panel and agreement that the pre-eminence test is satisfied and the gross value is acceptable, a recommendation will be made to the relevant minister (26) that the offer should be accepted. The decision of the relevant minister will be final and binding. The relevant minister for each case will depend on the location of the objects being offered and their links to specific parts of the United Kingdom. It is recognised that objects may have close associations with England, Scotland, Wales or Northern Ireland. Objects can have a 'pure' interest for the regions or 'some' interest. A pure interest is one where the object is:
   located in the region; and

   either the offer contains no wish as to where the item is to be
   displayed or there is a wish that it is displayed in the region.


For each region there is a relevant minister: for England it is the Secretary of State for Culture, Olympics, Media and Sport, for Scotland it is the Scottish Ministers, for Wales it is the Welsh Ministers and for Northern Ireland the relevant minister will be the Northern Ireland Department of Culture, Arts and Leisure.

Aside from 'pure' interest, an object may have 'some' interest for England, Scotland, Wales and Northern Ireland if it is
   located in the particular region or

   the offer contains a wish that it will be displayed there.


Acceptance of the offer, where there is some interest in a particular region, is the final decision of the relevant minister which is the Secretary of State for Culture, Olympics, Media and Sport, acting concurrently with the Scottish or Welsh ministers or Northern Irish Department of Culture, Arts and Leisure, as appropriate to the offer.

'FOR THE BENEFIT OF THE PUBLIC OR THE NATION'

The existing AIL scheme allows for the nomination by the offeror of a specific institution as the ultimate destination and owner of the object, or group or collection of objects; that nomination is made either as a wish or condition of the offer. If the transfer to a particular institution is a condition of the offer for AIL and it cannot be met for any reason, the offer will not be capable of being accepted. However, an offer for AIL purposes made with a wish may be accepted even if the wish cannot be fulfilled. In contrast, for offers made under the CGS, the donation must be to the nation, rather than to a particular body or institution. (27) It will be for the relevant minister to decide where the chattel will be housed. (28) Although it is likely that some regard will be given to the donor's wishes as expressed in the CGS offer, there is no guarantee that those wishes will be observed. (29) The offeror will not be able to make it a condition of the offer that the object is displayed at a particular eligible institution.

The response given by DCMS to the consultation document made it clear that in most cases ownership will be transferred permanently from the nation to a receiving eligible institution and that the receiving institution will be not just a body as defined in Schedule 3 of the Inheritance Tax Act 1984. It has also been recognised that the range of receiving institutions may be too narrow if CGS attracts a greater range of material than hitherto. (30) This issue may be reviewed closely as CGS is taken up. The links between an acquiring institution and donors are often strengthened by the public acknowledgement by the institution of the contribution by donors. The draft legislation for CGS does not take this into account, although it was raised in responses to the consultation. (31)

One issue that is made very clear in the guidance to the scheme is that donations which involve extended loans to non-eligible institutions will not be accepted. (32)

RATE OF TAX REDUCTION

Under the first proposal for CGS, the rate of tax reduction was set at 25 per cent of the agreed gross value of the objects offered. In the draft legislation this rate has been changed to 30 per cent for individuals (33) and to 20 per cent for companies. (34) The offeror must include a statement of the estimated gross value of the object being offered and justify that value with the inclusion of details of values of similar objects, for example those sold at auction and the prices they achieved: The value will be considered by the AIL Panel and negotiations may ensue until an agreement is reached with the Panel. Assuming that the internal procedures are the same for CGS as for AIL, the Panel will appoint advisers to comment on the gross value and report to them. (35)

The tax reduction is given by treating the tax liability as if it had been paid on the due date. (36) This may confer some advantage where there are multiple due dates of payment. Nevertheless, if tax was due and has not been paid on time, interest will still be charged for the period from the due date until the date of registration of the offer.

TIMING AND ORDER OF THE TAX REDUCTION AGAINST LIABILITIES

For corporation tax purposes, the tax reduction will be given in the period when the gift is registered. (37) If the value of the reduction exceeds the corporation tax liability for the same period, the excess reduction will be wasted. For individuals there will be more scope for planning, to enable claims for the reduction against liabilities to have effect over a longer period.

An individual offeror may nominate whether the reduction is to be in income tax or capital gains tax; in the absence of a nomination, the reduction will be given in income tax in priority to capital gains tax, which for most taxpayers should be more beneficial. (38) Any excess available reduction can be set against the other tax. The year in which the offer is registered is the first year in which the reduction may be used but, in anticipation of a tax liability in later years, an individual may agree a schedule of up to five years of tax reduction at the time of registration, including the tax year in which the offer is made. (39) The schedule must be drawn up by the offeror, submitted at the same time as the offer and demonstrate how the reduction will be spread over future income or gains. (40) Once accepted, the tax reduction schedule may not be disturbed or varied should future liabilities be insufficient to absorb all the available tax reduction, but it is possible to have years within the five-year period in which no reduction is specified. (41)

The difficulties with agreeing an irrevocable future schedule for tax reduction may be immediately apparent. The offeror will have to be certain that he will have sufficient liabilities to absorb all the reduction in the ensuing tax years. If he fails to have sufficient tax liabilities, the excess reduction which he would otherwise have used, will be lost. In addition, if an offer is made and a schedule of future tax reduction agreed, that arrangement will take precedence over any subsequent offer under CGS. (42) A taxpayer who is intending to make an offer should have regard to his existing arrangements before proceeding with an offer in subsequent years.

LATE PAYMENT INTEREST AND TAX PENALTIES

When an offer is accepted, there will be no late payment interest or tax penalties applied, since the tax is treated as paid at the date of registration of the offer. (43) However, any late payment interest or penalties which have accrued prior to the registration date, remain payable even if the offer is accepted. (44)

EFFECT ON OTHER TAXES OF MAKING AN OFFER

For the purposes of capital gains tax and corporation tax, the offer of an object under CGS will not trigger a chargeable gain for either an individual or a company if it would otherwise do so. New subsections will amend section 258 of the Taxation of Chargeable Gains Act 1992 to exempt taxable gains which would otherwise arise on donations under the scheme.

The treatment for inheritance tax and estate duty is less straightforward. (45)

Inheritance Tax

The draft legislation also includes amendments to the Inheritance Tax Act 1984. The amendments provide for an exemption from inheritance tax (IHT) in circumstances where a charge might otherwise arise. Exemption from IHT is given:

* for the donation of objects under CGS;

* where the offeror of the property received it as a potentially exempt transfer (PET) and the person from whom the offeror received it dies within seven years of making the PET; and

* by way of a recapture charge where the objects were conditionally exempt from IHT, including where an object was conditionally exempt from IHT on the grounds of historical association with an outstanding building. In this circumstance the donation under CGS will not be a chargeable event and will not trigger a recapture charge either on the deferred liability under section 32 of the Inheritance Tax Act 1984 or where the object was inherited by the offeror and was previously exempt from IHT and the offer was made within three years of the death of the previous owner and the offeror has not yet made a claim to renew the conditional exemption.

Estate Duty

Objects which are subject to conditional exemption from estate duty may be offered under CGS but no income tax, capital gains tax or corporation tax reduction will be given for the offer of those objects, although no charge will arise to the deferred estate duty. One explanation for this approach is that works conditionally exempted from estate duty frequently benefited from a deferral from high rates of tax so that to give a tax reduction in addition to extinguishing the deferred estate duty liability, would be to give the donor a disproportionate benefit. (46)

Double-Tax Treaty Relief

There is no mention in the draft legislation of its effect on double-tax treaty relief nor whether the tax reduction will be a qualifying reduction for jurisdictions with which the UK has a tax treaty. In the absence of guidance, it would seem appropriate for the reduction to be treated like any other tax reducer and to follow the terms of the individual double tax treaties involved.

IMPLICATIONS FOR NON-UK DOMICILED TAXPAYERS

The announcement of the introduction of CGS coincided with the announcement of the relaxation of the remittance basis rules for non-UK domiciled or non-ordinarily resident taxpayers who bring works of art into the United Kingdom. There are, likewise, amendments to section 809Y of the Income Tax Act 2007 to allow remittance basis users to take advantage of the CGS. (47) Where an offer is made under the CGS, and the object offered has been remitted and derives from untaxed foreign income or gains, the offeror will not be taxed on that remittance, provided that the CGS offer is made at the same time as the object is remitted to the United Kingdom.

WHAT IF THE OFFER IS REJECTED?

There is no obligation for the offer to be accepted by the Panel and there are some grounds on which the offer will be rejected immediately. Items in poor condition are likely to be rejected without further consideration. (48) If the annual budget has already been reached when the offer is made, or if the value of the offer would or could cause the budget to be exceeded, it will be rejected immediately. (49)

If rejected, the tax liability which was treated as reduced is reinstated and any interest or penalties which would have otherwise applied are then re-imposed. The due date of payment is the later of 30 days, beginning with the day on which the offer was rejected and the date when the tax would otherwise have been due. In effect, this means that an offer which fails to reduce a tax liability will not, in the interim, lead to an interest holiday. (50)

OTHER CONSIDERATIONS

The annual budget for the tax reduction is 30 million [pounds sterling], which has to be shared with the tax settled under the AIL scheme. This means that from 6th April 2012, the annual amount of tax settled under both schemes cannot exceed 30 million [pounds sterling]. Until 5th April 2012 the total tax settlement for the AIL scheme alone is 20 million [pounds sterling]; in both schemes, the budget will be allocated on a first-come, first-served basis. (51) There is no indication that each scheme will have a defined 50 per cent share of the budget, so if a very large tax bill is settled by an offer under one scheme, it would reduce the possibility for tax to be reduced under the other. For any taxpayer contemplating or intending to use either scheme, registering their claim as early as possible in the tax year would be advantageous.

COMMENTARY

After a long period in which funding for the acquisition of objects has been difficult and frequently debated, these proposals are generally to be welcomed as an incentive towards supporting the arts. The statement that the Government will keep the scheme under review should be welcomed, but there are inbuilt difficulties in the scheme as it is presently constituted.

The irrevocable tax schedule may deter offerors from making gifts of high value objects as this would entail the accurate forecasting of income or gains, which is notoriously difficult. It would perhaps have been preferable to allow for a reduction against the liabilities of prior years, where these have been agreed and settled and to allow for this reduction over a period of the year of registration and the previous four tax years. This could have been drafted to incur no additional cost to the Treasury but would have given taxpayers certainty that the tax reduction would be fully utilised.

The prohibition against offers from trustees or joint owners seems to be unnecessarily restrictive, and may limit the effectiveness of the scheme, since so many of these taxpayers are the owners of objects which have been agreed as satisfying the pre-eminence test. The practical aspects of how HMRC and the Arts Council could process and monitor the possibly increased numbers of offerors if CGS were extended to joint owners, could militate against its implementation.

The rejection of a high value offer in any year where its acceptance would lead to the budget being exceeded at the time of the offer, may lead to the offer of more low value objects or collections. Likewise, the restriction against hybrid offers may reduce the take-up of the scheme. The possibility that the objects offered may not become the property of a nominated eligible institution may deter some potential offerors from using CGS. The compatibility with EU legislation in this regard may limit the opportunity to widen the class of eligible institutions or to make a donation to a particular institution a condition of the offer.

By using a first-come, first-served method of allocating the budget, it is likely that the well-advised and well-prepared offeror will seek to make their offer as soon as possible during the course of the tax year. There is no automatic mechanism for re-consideration of an offer should it satisfy the pre-eminence requirements but be too expensive for acceptance when first offered. In this circumstance, it appears that the offeror would have to re-apply in a year when the budget has not already been allocated. To treat taxpayers equitably it would be useful to give a running budget of available credit on the website of the Arts Council, so that offerors can establish whether it is possible to make an application in that year, rather than incurring fees on an offer where there is no possibility of success due to budgetary constraints. Ideally, the offeror would wish to have details of the budget actually available and potentially available, in case some offers are rejected or withdrawn and funding is released as a consequence.

Overall, the CGS is a positive development in supporting the arts, further refinements of the legislation should make it even more beneficial to both offerors and eligible institutions. As part of a general policy of encouraging philanthropy, it is a welcome incentive for taxpayers and in these challenging economic times can only be applauded.

(1) Published by HM Treasury, following an initial consultation document issued on 7 July 2003.

(2) See Museums Association: Response to the Goodison Review at para. 1.4.

(3) See Art Fund review of its 'Living and Giving' campaign, published Dec. 2006.

(4) Published as 'The Market for Art' 6 April 2005.

(5) Consultation draft legislation issued on 6 Dec. 2011 by HM Treasury, as Schedule 1 to the Finance Act 2012, 'The Draft Legislation'. The Draft Legislation, s. 2.

(6) See para. 8 of the guidance given in 'Cultural Gifts Scheme: A Scheme for the Gifting of Pre-eminent and Associated Objects in Exchange for Tax Reductions', published by the Department of Culture, Media and Sport, 6 Dec. 2011, 'The Guidance'.

(7) The Draft Legislation, s. 1.

(8) The Guidance, at para. 16.

(9) The Guidance, at para. 13.

(10) The Guidance, at para. 23.

(11) The Guidance, at para. 22.

(12) The Draft Legislation, s. 19 and The Guidance, at para. 21.

(13) The Guidance, at paras 10, 30 and 36.

(14) The Draft Legislation, at s. 6 (6)

(15) The Guidance, para. 39.

(16) The Draft Legislation, s. 17.

(17) The Guidance, para. 35.

(18) The Guidance, para. 46.

(19) The Draft Legislation, s. 16

(20) The Guidance, para. 26.

(21) The Guidance, para. 16(a).

(22) The Draft Legislation, s. 16(b).

(23) The Guidance, para. 34.

(24) 'Gifts of pre-eminent objects and works of art to the nation: response to consultation' HM Treasury, published Dec. 2011, at para. 2.22 (response to question 4); The Guidance, para. 25.

(25) The Guidance, para. 30.

(26) The Draft Legislation, s. 17.

(27) The Draft Legislation, s. 1(2)(a).

(28) The Guidance, para. 38. This gives a broad definition of an eligible institution which may house an object or collection or group of objects donated under the scheme.

(29) The Guidance, para. 39.

(30) The Guidance para. 42 gives details of how availability of objects will be made known, including publication on the Arts Council's website and in the case of archives, in The Times Literary Supplement.

(31) See responses to the consultation, above, note 24, response to question 6, at para. 2.32

(32) The Guidance, para. 28.

(33) The Draft Legislation, s. 4(5)

(34) The Draft Legislation, s. 11 (3)(a)

(35) The Guidance, para. 17.

(36) The Draft Legislation, ss. 3(1) and 10(1).

(37) The Draft Legislation s. 10(2).

(38) The Draft Legislation s. 5.

(39) The Draft Legislation s. 3

(40) The Guidance para. 16(g).

(41) The Guidance para. 46.

(42) The Draft Legislation, s. 4 (1).

(43) The Draft Legislation, s. 6 (2)

(44) The Draft Legislation, s. 6 (7)

(45) The Draft Legislation, ss. 20 to 28 contains the consequential amendments for the purposes of capital gains tax, inheritance tax, corporation tax and income tax.

(46) The responses to the consultation at para. 2.47, above, note 2 (response to question 9), make it clear that granting an income tax reduction as well as extinguishing the Estate Duty liability was considered and rejected by HM Treasury. The Society of Trust and Estate Practitioners in their comments on the draft legislation at para. 2.4, published on 9 Feb. 2012, have expressed their disappointment at this omission.

(47) The Draft Legislation, s. 28.

(48) The Guidance para. 29.

(49) The Guidance, para. 30.

(50) The Draft Legislation, s. 14.

(51) The Guidance, paras 9 and 13.

Ruth Cornett, Director, Christie's Heritage and Taxation Advisory Service.

Note: these comments are provided in the author's personal capacity and no action or omission to act should be taken as a result of reading this article.
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