One of the many unprecedented ways in which Covid-19 has impacted on every aspect of public life includes the closure of museums, art galleries, cultural institutions and heritage properties. This has led to much uncertainty for owners of artworks, objects or heritage properties which qualify for HMRC's Conditional Exemption Tax Incentive Scheme, as to how to fulfil their obligations to grant access to the public to these items, such access being a key part of the tax exempt status afforded them.

Conditional exemption is a status that is granted to outstanding land and buildings, works of art and other objects that are of pre-eminence for their national, scientific, historic or artistic interest or that are historically associated with an outstanding building. Assets which qualify under the scheme can benefit from a deferral of inheritance tax on death or on a lifetime gift, as well as a deferral of capital gains tax in certain circumstances.

The owner must grant and publicise reasonable public access to the assets for a minimum number of days in the year, as agreed with HMRC. The public access requirement, which is one of several qualifying conditions, can be satisfied either by granting access to the object in situ or by loaning the qualifying asset to a museum or gallery. In the light of the difficulty in granting public access in the current climate, HMRC has published updated guidance on temporary changes to the scheme due to coronavirus and this offers helpful and much needed clarity in these troubling times.

Closing or delaying the opening of a property

HMRC has confirmed that it will not consider that the owner of a national heritage property will have breached their agreement if the property is closed or its opening is delayed to later in 2020. This will apply even if it means that the property will not be open for the full period covered by the agreement with HMRC or will not open at all in 2020.

When government advice changes, HMRC expects the property to be open 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 an object is on loan to a museum, gallery or other venue which is closed due to the coronavirus, this will not be treated as a withdrawal of public access to the object and as a breach of the agreement with HMRC. This will apply even if the object is not on show at all in 2020.

Objects that can only be seen by appointment

Owners of objects that can only be seen by appointment are not expected to grant access until government advice on social distancing changes.

Advertising, publicity and promotional material

One of the requirements of an agreement with HMRC under the scheme may be to produce publicity or promotional material. If this is not possible under the current circumstances, it will not be considered a breach of the agreement. HMRC clarify that it has no objection if publicity or promotional material states that access to a property may be subject to change or cancellation, depending on the developing circumstances.

It will be important for owners of assets which benefit from Conditional Exemption to keep matters under review, especially as and when the country starts its slow and cautious move away from lockdown, so as to ensure that at all times the conditions for Conditional Exemption are met as far as is possible and in line with HMRC's expectation as they adapt with time.

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