Our Specialist VAT team was approached by a well-known artist who was concerned about the VAT treatment on the sale of his works by an international gallery.
The international gallery, who was represented by an accountancy firm with limited experience in dealing with art, incorrectly advised our client that VAT should not be charged on the basis that the painting had been exported outside the EU.
As the ownership of the painting passed from our client, to the gallery, and then to the final customer, the artist should charge 20% VAT to the gallery. The gallery can then zero-rate the supply it made to the non-EU buyer and recover the VAT charged by the artist as input tax.
Failing to address this issue would have left our client with a large VAT liability plus penalties, should HMRC open a random VAT inspection in the future.
In this case, we achieved a successful outcome by working with the artist and gallery to correctly structure the VAT supply chain.
Jeffreys Henry LLP is a specialist provider of accountancy, tax and advisory services to artists, art galleries, art dealers and private collectors. Some of our clients include Victoria Miro Gallery, Lyndsey Ingram, Peter Doig, Chris Ofili, Cardi Gallery, Kasmin, Daniel Chadwick, Idris Khan OBE, Conrad Shawcross and Edel Assanti Gallery.
