The Executors of Lord Howard of Henderskelfe: “Plant and machinery” imitating art?


Andy Wood

Andy is a practical, creative tax adviser who assists a variety of clients in achieving their personal and commercial objectives in the most tax efficient manner.

A visit to the Tate Modern might unearth plenty of “plant and machinery” masquerading as art work. However, can art work qualify as plant and machinery? A case in 2013, heard in the Upper Tribunal (The Executors of Lord Howard of Henderskelfe deceased v HMRC) discussed this matter and, perhaps, came to a surprising conclusion.

The case centred around a claim by the Executors of the late Lord Howard’s estate that a painting by Sir Joshua Reynolds was a “wasting asset” and, therefore, exempt from capital gains tax. This was a big deal because Sir Joshua knew the correct end of a paint brush and the painting had sold for £9m.

Every tax student knows, or at least once knew, that a wasting asset is one that has a life of less than 50 years. A quick look at Sir JR’s Wikipedia page will reveal he died in 1792 so one might be forgiven for thinking this claim was a bit of a none starter.

However, one should know better than that by now. The argument up for consideration was a little more clever than that outlined above.

The executors claimed that the painting, which was hanging in the public area of Castle Howard, the setting for Brideshead Revisited, represented an attraction to visitors and should be regarded as plant and machinery.

So what? Well, the legislation provides that plant and machinery is regarded as having a predictable life of less than 50 years. It is a case of reality being irrelevant. The result was that the asset was as a wasting asset and therefore exempt for CGT.

The preamble to this blog notes that P&M masquerades as art work in the Tate Modern. In many ways, this was a P&M case masquerading as a CGT case.

The conclusion was that the Upper Tribunal felt that the painting was used for the promotion of the trade carried on at Castle Howard and it was sufficiently permanent to be regarded as plant.


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