Artwork is wasting asset

Lord Howard of Henderskelfe died in 1984. He had owned a painting by Sir Joshua Reynolds that had been on display since 1950 in Castle Howard owned by Castle Howard Estate Ltd.

Lord Howard’s executors sold the painting in 2001 and claimed that the gain from the disposal was exempt under TCGA 1992 s 45 on the basis it was a wasting asset.

HMRC refused the claim saying the artwork was not plant. The First-tier Tribunal dismissed the executors’ appeal. The Upper Tribunal overturned that decision. The Revenue appealed.

The Court of Appeal said only items used in a trade profession or vocation could constitute plant under s 44 – but nothing in the section justified the conclusion that the only person benefit under the legislation was the one who had used the asset or the trader in whose business the plant was used.

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