Haunch of Venison VAT victory

HM Customs dispute over Dan Flavin and Bill Viola works

Trials in which the meaning of art is in dispute are rare. A notable exception is the well-known 1928 trial, Brancusi v United States, in which the artist successfully established before the US customs court that his Bird in Space was a sculpture and could therefore be imported into the US free from import duties.

In September 2008, a similar trial took place before the London VAT and Duties Tribunal. The issue was whether six disassembled video installations by Bill Viola and a light sculpture by Dan Flavin could be imported by the Haunch of Venison gallery from the US into the UK as sculptures in 2006. If so, they would be subject to import VAT at the rate of 5% and exempt from customs duty. If not, they were subject to import VAT at the standard rate (currently 15%) and to customs duty.

Her Majesty’s Revenue & Customs (HMRC) claimed (Haunch of Venison Partners Limited v HM Revenue and Customs) that the works by Viola and Flavin could not be categorised as “sculpture” for import purposes under EU customs law (in technical legal terminology, classification heading 9703 of the Combined Nomenclature in Council Regulation 2658/87/EEC). They argued that the relevant import category for these works was “electrical devices”, which covers “image projectors” and “lamps and light fittings”. Hence they would be subject to both customs duty and the full rate of VAT. HMRC further argued that VAT and customs duty were payable on the full value of the installations declared by Haunch of Venison at the time of import (as works of art), as opposed to the far lower value of the component electrical parts.

At trial, HMRC argued that the works were not art when disassembled into their various electrical component parts and crated for shipping. HMRC also sought to persuade the tribunal that the artistic element of Viola’s work was limited to the digital video data or the flat image projected onto the video screen. In other words, that Viola’s work lacked the three-dimensional qualities necessary to be regarded as sculpture.

Haunch of Venison contended that as a matter of EU customs law (and on the facts), the installations should be treated as being sculpture upon importation. The gallery pointed to earlier favourable precedents, including the classification by the European Court of Justice of a Claes Oldenburg work imported into Germany as a work of sculpture (Reinhard Onnasch v Hauptzollamt Berlin-Packhof, Case 155/84). US tax authorities had also confirmed that they would treat the works of Viola and Flavin as sculpture upon importation into the US.

A problem for commercial galleries when importing contemporary work of arts into the UK is that there is no general custom category for them under EU custom law. There is a general custom chapter headed “works of art, collectors’ pieces and antiques”, known as Chapter 97. However, in order to fall within this, the work must fit within a sub-category (known as a “classification heading”), for example “painting”, “print” or “sculpture”. If the work being imported does not easily fit within one of the sub-categories, the risk is that HMRC will argue that the imported artwork is covered by a different chapter.

At trial, witnesses for Haunch of Venison included Sandy Nairne, director of London’s National Portrait Gallery, Martin Caiger-Smith, independent curator and art critic, and Robert Cumming, writer and art critic. They explained why Viola and Flavin’s installations should be treated as sculpture. In particular, it was demonstrated how Viola specially customises digital video equipment in order to maximise the artistic impact of his installations and how his video screens are intended to be installed (according to precise instructions) in order to emphasise their three-dimensional qualities.

The tribunal took into consideration this expert evidence and accepted that sculpture has expanded considerably during the 20th and 21st centuries to encompass novel art forms including video installations. Accordingly, the works of Flavin and Viola should be treated as sculpture at the time of importation. The tribunal rejected HMRC’s argument that whilst the installations may be works of art when assembled, they were not when unassembled or disassembled and packed into crates at the time of importation. The tribunal “[regarded] it as absurd to classify any of the works as components ignoring the fact that the components together make a work of art”.

The tribunal has provided an important precedent for contemporary art galleries and organisations seeking to import the work of international contemporary artists for sale into the UK. Haunch of Venison’s success in defending the status of these objects has clarified the treatment of video art and contemporary sculpture generally, for the benefit of everyone involved in the British art market.

The writers are lawyers with Withers LLP, the law firm that acted for Haunch of Venison

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