Taxing question of Scotland’s Old Masters
If independence is passed, what will happen to the privately owned paintings on loan to public collections?
By Javier Pes. News, Issue 254, February 2014
Published online: 17 February 2014
The long-term loan of important Old Master paintings to the National Gallery of Scotland, Edinburgh, could be threatened if Scotland votes “yes” to independence in September. Sources with close connections to Scottish institutions and collectors say there is a growing possibility that leading lenders will sell their works or move them south if, as is suspected, an independent Scotland’s tax regime changes to target the rich.
Chills down spines
The paragraph that has sent chills down spines appears towards the end of the 667-page plan for an independent Scotland, which was launched at the end of November by Alex Salmond, Scotland’s nationalist first minister.
The white paper, “Scotland’s Future”, says that “decisions on the tax system and all specific taxes… will be made by the parliament and government of an independent Scotland”. Major art collectors and owners of historic houses benefit from the UK tax system’s exemptions from inheritance tax. HM Revenue and Customs allows items to be exempt if they are of significant importance to the nation, if there is public access to them and so long as they remain in the UK.
Last September, before the white paper was published, the Historic Houses Association for Scotland, which represents the owners of 250 historic castles and houses in Scotland, sought “clarification” from the Scottish government on exemption from inheritance tax, among other issues.
The association asked if existing exemptions would be changed if Scotland were to separate from the UK. It warned that if that happened, or if exemptions were removed, owners could face “very large tax liabilities”, as high as 80% of the value of the property. Owners would “almost certainly be forced to sell”, the association warned.
Nick Way, the director of the Historic Houses Association, declines to say more “at this stage”. He confirms that the association did receive a response. The Scottish National Party says that if it came to power in an independent Scotland, it would maintain existing heritage taxation “until there was an opportunity to review [it]”.
Raphael’s The Virgin and Child (The Bridgewater Madonna), around 1507, is on the Revenue’s list of exempt items. The Old Master is among 28 works by artists including Titian, Poussin and Rembrandt that are on long-term loan to the National Gallery of Scotland from the Duke of Sutherland. He declined to comment, as did another major lender, the Duke of Buccleuch, whose Leonardo, the Madonna of the Yarnwinder, around 1501, has been on show in the gallery since 2009.
When asked about such concerns, few were willing to talk on the record—but, tellingly, no one chose to deny them. The National Galleries of Scotland confirms that its trustees will consider “a wide range of potential consequences relating to the contents of the white paper”. Ben Thomson, the chairman of the board of trustees, says: “We are extremely confident that we will continue to enjoy very positive support from the Scottish government for our ongoing collaborations with private collectors.”
Opinion polls indicate that Scottish voters are currently inclined to vote “no”. However, one source says: “We’re being told everything will be rosy. But who knows when the politics take over?”
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