Conditional Exemption incentives schemes

Request:

  1. What kind of checks if any does HM Revenue & Customs (HMRC) carry out to make sure the Conditional Exemption incentives schemes is working correctly?
  2. Since January 2005 how many individuals and/or organisations enjoying this particular benefit have been discovered to have not been fulfilling their obligations as regards access to the public? Could you please state what action was taken with regards to each case.
  3. Could you please identify these individuals and organisations?
  4. Since January 2005 how many organisations and/or individuals have lost their right to the benefit because they have not been fulfilling their obligations regarding access?
  5. Could you please identify these individuals and organisations?
  6. Could HMRC please provide copies of any research it has carried out into the operation and implementation of the Conditional Exemption Incentive scheme?

Dealing with each in turn:

  1. Checks that are carried out:

    Works of art

    Owners of works of art are contacted every five years in writing and asked to account for the conditionally exempt objects in terms of:

    • the description of the items
    • confirmation that the items remain in the same ownership
    • confirmation that the items are still in the UK
    • maintenance and preservation report
    • the access undertakings agreed between the owner and HMRC in return for the exemption

    Land and buildings

    Each property is inspected approximately every five years by the government's Heritage Advisory Agencies acting on behalf of HMRC as follows: Outstanding Buildings: English Heritage, Historic Scotland, Cadw, Environment & Heritage Service N Ireland, Outstanding Land: Natural England, Scottish Natural Heritage, Countryside Council for Wales, Environment & Heritage Service N Ireland.

    After the inspection the agencies report back to HMRC who engage with the owner as necessary on any issue that needs to be addressed.

    In addition to these five-yearly inspections, owners of conditionally exempt land and buildings have to send an annual report to HMRC. These annual reports cover:

    • disposals
    • maintenance and preservation
    • publicity, provision and take-up of public access

    Historically associated objects

    The historically associated contents of outstanding buildings are monitored in a similar way to the process for buildings themselves. Owners account to HMRC in the same way as owners of outstanding buildings but on a five-yearly basis only. Historically associated contents are also subject to the same inspection process (by the government's Heritage Advisory Agencies) as the buildings themselves.

    Other checks

    In addition to the above, we also undertake personal visits each year to a sample of owners of both works of art and land and buildings, and the HMRC website invites members of the public who experience difficulties gaining access to chattels to report the matter to us.

  2. We do not keep records that would enable us to identify cases where an issue has arisen specifically about access, although we can identify cases where access has been denied by the owner and the deferred tax charge has been raised (see answer to Question 4).
  3. This information is exempt from disclosure under s. 44(1) of the Freedom of Information Act (FOIA).
  4. Since January 2005 a total of 14 owners have lost their exemption on some or all of the property that they own due to the denial of public access.
  5. This information is exempt from disclosure under the FOIA, for the same reasons as those given at point 3 above.
  6. HMRC has not carried out any specific research into the operation and implementation of the Conditional Exemption Incentive Scheme. But HMRC naturally keeps the operation of the whole scheme under constant review.

As an office we do not just collect tax on occasions when the taxpayer submits an account, we also check to see whether contingent claims to tax have matured. In the past this has included monitoring for Estate Duty reversions, timber sales, sales of works of art and so on.

When the Conditional Exemption regime was introduced in FA75/76, the requirement for monitoring was made explicit. Section 31(2) (b) IHTA refers to "(b) [such steps as are agreed between the Treasury (a) and the person giving the undertaking, and are set out in it (f),] will be taken for the preservation of the property and for securing reasonable access to the public."
Inheritance Tax Act 1984 - Section 31

Our approach to monitoring the Conditional Exemption regime has always been supported and indeed encouraged by the periodic inspections of the National Audit Office.