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No tax to pay on £9.4m ‘wasting asset’ painting by Sir Joshua Reynolds
10:25am Tuesday 19th March 2013 in News
Simon Howard, pictured at Castle Howard, has won a High Court ruling that the Sir Joshua Reynolds painting, Omai, should be exempted from capital gains tax. The picture was sold to fund the divorce of Simon Howard from his wife, Annette
A LENGTHY dispute over whether a £9.4 million painting from Castle Howard should be exempt from capital gains tax has ended in victory for the North Yorkshire stately home.
The Sir Joshua Reynolds painting, Omai, a romantic portrait of one of the first Pacific Islanders to visit Europe, is viewed as possibly the artist’s finest work and for centuries graced the walls of the stately home near Malton.
The painting was sold at Sotheby’s in 2001, in part to fund the divorce of Simon Howard from his wife, Annette, who was known to her friends as “Scruff”.
Omai was part of the estate of politician, soldier and erstwhile chairman of the BBC’s Board of Governors, George Howard, who died in 1984, and his executors have been rowing ever since with the tax authorities over whether the the £9.4 million should be subject to capital gains tax.
The executors, of whom Simon Howard is one, argued that, as the painting was an essential draw for visitors to Castle Howard, it should be viewed as “plant” used in the running of the house as a business and thus exempted from the tax levy.
And yesterday, at the High Court Mr Justice Morgan ruled the painting did fall into the category of “plant and machinery”.
The judge accepted it should thus be viewed as a piece of “apparatus” and a “wasting asset” that, at least in theory, became worthless 50 years after it was placed on public display in the 1950s – even though its value has in fact continued to multiply since then.
The judge’s ruling will be seen as a significant boost to landed families who own valuable collections of art or antiques, but are engaged in a perennial fight to maintain their inheritance against tax.