The levy of around 30 per cent was raised on the grounds that the partial repayment of buyers’ and sellers’ premiums – relating to the period 1993-1999 when the world’s largest auction houses were deemed to have colluded – constitute “a profit trading in the United States”.
Although accountants were quick to confirm that the tax – administered on behalf of the US Treasury by Price Waterhouse Coopers – was entirely proper, they also advised that it can effectively be recovered as part of the double taxation agreement that operates between the USA and the UK.
In its June newsletter LAPADA advises that the extra income (the gross payment) should be added to UK income, and the tax paid counted as part of a UK tax bill.
For many dealers this will effectively mean that the tax deducted is not all lost, although this is a specialist area where dealers may wish to take advice from their own accountants. It has also emerged that part of the repayments will be made in the form of transferable certificates that can be used to pay future vendor charges at either Sotheby’s or Christie’s.
Regular sellers will find these useful although the certificates are not redeemable on the buyer’s premium.
Those who have little use for them may wish to contact Chicago Clearing Corporation (CCC), a US company who specialise in this type of scenario. CCC is holding an auction that allows recipients of the Sotheby’s and Christie’s certificates to sell them quickly for cash. The deadline is June 27, 2003 and contact details appear below.
Alternatively, consignors to USA or UK auctions, now or in the future, can take advantage of a rebate programme developed by CCC that gives voucher holders discounts off consignment fees.
Chicago Clearing Corporation can be contacted via:
Tel: (00) 1 312 775 3538 (Andrew Wozniak)
Website: www.chicagoclearing.com
Email: awozniak@chicagoclearing.com
LAPADA issues guidelines over US settlement cheques
LAPADA has issued some valuable guidelines to the recipients of cheques relating to the Sotheby’s and Christie’s price-fixing settlement in the USA. As the cheques began to arrive by post last week many were surprised to see that the US Federal Government had deducted a withholding tax from the awards.
