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Art in the office

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A client of mine is considering buying a picture through his Ltd company to hang in the company office. The price of the piece he is considering is in excess of £50k.

Am I correct in thinking that this would be put to the balance sheet as a fixed asset - with no capital allowances claimed?

If the comapany sells later at a profit CGT will be due?

Thanks 

 

Replies (23)

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By Accountant A
16th Oct 2019 12:04

No capital allowances and no CGT.

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By mrme89
16th Oct 2019 12:08

Company ... CGT?

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By jonibarnes
16th Oct 2019 12:09

sorry CT

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By Tax Dragon
16th Oct 2019 12:19

How many employees?

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Replying to Tax Dragon:
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By chicken farmer
16th Oct 2019 12:29

I guess you are thinking in terms of a benefit in kind? Maybe there's only 1 employee/director and the 'office' is his home?

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Replying to chicken farmer:
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By Tax Dragon
16th Oct 2019 13:10

I wondered what the most valuable thing in our office is.

This triggered thoughts along the security lines that DJKL mentions.... and where the office is, as you mention.

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Replying to Tax Dragon:
Hallerud at Easter
By DJKL
16th Oct 2019 13:36

In ours it is moi. (well actually a close run contest, maybe the coffee machine edges it)

You do have to be careful, someone I know had to install all sorts of security/sprinkler etc kit at his old house to satisfy his insurers, another person I know had to store jewelry with their bank not in the house.

Years ago my father collected silver, nothing individually stunningly valuable (as my sisters and I now each have some of it in our houses- well my part is not that valuable, albeit very pretty) but as a total collection his insurers insisted it was not kept all together in the family home but in the strong room in his office

Afraid a £50k picture, as the OP suggests, likely breaks all limits (I think I have to disclose anything over £2500/£3,000 on my house policy) no idea re OP's client but I strongly suspect commercial policies will also have individual item/set limits.

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Replying to ImmanuelLieber:
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By spidersong
16th Oct 2019 15:44

ImmanuelLieber wrote:

DJKL wrote:

In ours it is moi. (well actually a close run contest, maybe the coffee machine edges it)

In mine I come 5th, behind the wife (4th), 2 cats (3rd & 2nd), and the dog (1st). I know my place.

Really?

The cats let the dog get away with thinking it's top dog. If they do then they're probably playing the long game and the dog should watch out.

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Replying to spidersong:
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By C Graham
16th Oct 2019 15:55

I don't think you should tell the cats they're placed 2nd and 3rd - they may leave
generally it is always cats top, then everyone else in any order

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Replying to spidersong:
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By Tax Dragon
16th Oct 2019 15:56

A (nobviously needy) man decided to find out who loved him the most. He locked his wife, two cats and their dog in the boot while he went and pondered the meaning of life for a couple of hours in a coffee shop. When he opened the boot… you know who was pleased to see him.

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Replying to Tax Dragon:
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By C Graham
16th Oct 2019 16:02

woof

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By The Dullard
16th Oct 2019 12:31

You might be able to claim capital allowances, if the purpose of the painting is to remunerate.

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By WhichTyler
16th Oct 2019 12:44

And check if it needs to be accounted for as a heritage asset (old FRS30)

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Hallerud at Easter
By DJKL
16th Oct 2019 12:50

Just remind him about insurance and checking with his insurers in case they insist upon upgraded alarm system etc, especially given it will be hanging in a property that is presumably unoccupied overnight.

By chance I spent yesterday tracking down a painting one of our companies bought (it was hanging within a property we let out, the tenants have refurbished the property and it is not now visible- I want to know what they have done with it because if they are not going to use, and before it gets lost, we will bring it back to our offices)

However we only paid £1,075 for it fifteen years ago so it is now probably worth about £200!!

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By jonibarnes
16th Oct 2019 13:43

its not a home office, i did think myself about insurance etc. thanks for all the responses - very helpful

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By Richard Grant
16th Oct 2019 14:01

,

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By C Graham
16th Oct 2019 14:12

is it an asset or an investment? Would it depreciate?

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Replying to C Graham:
Hallerud at Easter
By DJKL
16th Oct 2019 14:32

Usually depends when the artist dies, a young career dashed and not enough time to saturate the market is promising, long protracted career maybe not.

I have an oil by a french artist (whose name now totally escapes me, think surname has an L) that might have been worth something over say £300 if he had not had the temerity to keep knocking out near identical versions of the same painting. (Arc de Triomphe street scenes)

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By brenbrady
16th Oct 2019 15:35

A wasting chattel or wasting asset. HMRC v The Executors of Lord Howard of Henderskelfe [2014] EWCA 278

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By Montrose
16th Oct 2019 16:00

A true story.
Company in City of London engages hot-shot executive, who fits out his own office with £250k of furniture /art etc.at cost of his employer
Company falls out with said executive, puts the entire £250k on P11D of outgoing employee. Not the usual "benefit" calculation!

More seriously watch the VAT rules for goods where a benefit accrues to a non registered person

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Replying to Montrose:
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By C Graham
16th Oct 2019 16:04

so company did not get ct relief on cost of fit out? and paid emp/er ni on the P11d

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7om
By Tom 7000
18th Oct 2019 16:40

He can buy it but it has to be hung facing the wall.

If he looks at it then he has a benefit in kind.

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By alan.rolfe
18th Oct 2019 17:35

Years ago I dealt with an enquiry in which the Revenue spotted we had claimed CA's (I think) on a picture for the client's boardroom.

They immediately said we can't have that... until I showed the Inspector the picture - it was a picture of Transit van showing off the company's work (sign writing/van customisation) and it was there to impress customers in boardroom meetings.

It was only about £200 and the Inspector grudgingly accepted it was for business purposes and could not be considered a benefit - boy, was it a dull picture!!

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