Capital taxation and tax-exempt heritage assets

Temporary Changes to the Conditional Exemption Tax Incentive Scheme for Heritage Assets

As a result of the Coronavirus outbreak, HMRC have announced some temporary changes to the scheme which exempts certain heritage assets from Inheritance tax and Capital Gains Tax where certain conditions are met.

Closing or delaying the opening of a property

The expectation is that owners of national heritage properties will follow Public Health England’s social distancing guidance.  If this means the owner has to close the property or delay its opening until later in the year HMRC have said that they will not consider the owner to have broken any agreement with them under the scheme.  This will apply even if it means the owner missing some of the period covered by their agreement, or the property does not open at all in 2020.  When government advice changes the expectation is that the property would be opened later in the year to make up for any lost days, if possible.

Objects on loan to other organisations that close due to government advice

If a conditionally exempted object is on loan to a museum, gallery or other venues which closes HNRC will not treat the withdrawal of public access to the object as if the owner had broken their agreement.
This will apply even if it means the object is not on show at all in 2020.

Objects that can only be seen by appointment

If an object can only be seen by appointment then owners will not be expected to agree to an appointment until the government’s advice changes – this will not be considered to break any agreement between HMRC and the owner.  

Advertising, publicity and promotional material

If the owners' agreement with HMRC includes the production of promotional material but they are unable to do so HMRC will not consider that the owner has broken their agreement.  Similarly, HMRC will not object if the owner includes information in any of their advertising or publicity that states the opening of their property may be subject to change or cancellation, depending on the developing circumstances.

WR comment – this is a welcome and pragmatic recognition by HMRC that the owners of heritage assets may not be able to meet the terms of any conditional exemption as a result of the Coronavirus outbreak.  It is clear however that the guidance is likely to evolve further over time, in particular as and when Government guidance on social distancing is amended.  Owners will need to be aware of the impact of future changes in that guidance on HMRC’s approach.

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