Customs and Excise have scrapped what was known as the 12-month rule, which barred any work of art re-imported to the UK after less than a year after its export from qualifying for the reduced rate of import VAT at five per cent. The rule was introduced as a measure to tackle tax avoidance, as it was thought that businesses might simply export works for a short period and then re-import them as a means of avoiding VAT at the full 17.5 per cent.
Customs subsequently became aware that the measure produced some unintentional practical and administrative problems for businesses and decided to do away with it. What they will now do is to allow all re-imported works to qualify for the five per cent reduction but will retain the right to disallow the reduced rate where the importer has artificially arranged the export and re-import simply to take advantage of the tax benefit.
BAMF chairman Anthony Browne welcomed the change, explaining how it had been possible for buyers at auction abroad unexpectedly to be stung by an extra tax burden. “If an auction house in the United States sold an English-owned painting that had been exported to the States within the past few months to an English dealer in New York, that dealer might not know that they would be liable for the full rate of VAT until they tried to re-import it to the UK.”
Customs relax Import VAT rules for art
PRESSURE from the British Art Market Federation has persuaded the Government to relax Import VAT rules on art that are thought to have damaged legitimate trade.
