Tax battle over Castle Howard £9.4m painting

Sir Joshua Reynolds masterpiece Omai, which was sold at auction at Sotheby’s for £9.4m in 2001

Castle Howard, between York and Malton

Simon Howard, with his wife, Rebecca

Simon Howard’s first wife, Annette

First published in Ryedale news York Press: Photograph of the Author by , Chief reporter

A LENGTHY dispute over whether a £9.4 million painting from Castle Howard should be exempted from capital gains tax has gone to the Royal Courts of Justice in London.

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, in a wrangle worthy of TV hit drama Downton Abbey, 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, argue 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.

Lawyers for Her Majesty’s Revenue & Customs are fighting the executors, but if their arguments succeed, it will be seen as a huge boost to other landed families who own valuable collections of art or antiques but – like the fictional Lord Grantham of Downton Abbey – are engaged in a perennial fight to maintain their inheritance against the depredations of tax.

George Howard lent “Omai” to the estate company that has owned Castle Howard since 1952 and the executors’ QC, William Massey, said Sir Joshua’s work was a major attraction that drew in the public.

He argued that, without it and other works of art from Sir George’s collection, the stately home would have been unviable.

A tax tribunal dismissed those arguments last year after pointing out that - although “Omai” was “no doubt greatly admired by visitors” – its sale did not lead to any falling off in visitor numbers, which in fact increased by ten per cent in subsequent years.

Mr Massey was asking senior judge, Mr Justice Morgan, to overturn that decision at the Upper Tribunal. The hearing, expected to last two days, continues.

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