The UK Treasury has closed a tax loophole after a lengthy case involving Reynolds’s Portrait of Omai (1776). The painting was sold by Lord Howard’s Castle Howard company for £9.4m in 2001. His estate argued that the work should be treated as “plant” used in the business of opening the house to the public and regarded as a “wasting asset”, and therefore not subject to capital gains tax. After a legal battle, this was accepted by the courts. In April, George Osborne, the Chancellor of the Exchequer, took action so that the exemption for wasting assets applies only if they were used in the seller’s own business (ie not by a third party) and provided no tax relief had already been claimed.
