23 March 2018
Trials in which the meaning of art is in dispute are rare as both legislatures and courts are understandably reluctant to make aesthetic judgments. A notable exception is the well-known trial of Brancusi v United States  in which Brancusi successfully established before the US customs court that his abstract bronze, ‘Bird in Flight' (1925) was a sculpture and could therefore be imported into the United States free from import duties.
Eighty years later, in December 2008, the VAT and Duties Tribunal (London) has held that video installations by Bill Viola and a light sculpture by Dan Flavin could be imported into the UK as ‘sculptures'. The effect of the Tribunal's decision means that the artworks will not be subject to customs duty and will be subject to import VAT at a reduced rate of 5% as opposed to the standard rate (17.5% at the time of importation). The dispute began after Haunch of Venison, a prominent contemporary art gallery, imported six disassembled video installations by Viola into the UK from the United States in 2006, and signalled their intention to import a light sculpture by Flavin. As the installations were declared as sculptures, they would be subject to import VAT at 5%. However, HM Revenue & Customs (HMRC) claimed that the works could not be categorized as ‘sculpture' for import purposes under EU customs law, on the grounds that the relevant import category for these works was ‘electrical devices' (which covers ‘image projectors' and ‘lamps and light fittings'). Hence they would be subject to both customs duty and the full rate of VAT. To the gallery's dismay, HMRC also argued that VAT and customs duty were payable on the full value of the installations declared by Haunch of Venison at the time of import (as works of art) as opposed to the far lower value of the component electrical parts. At trial, HMRC argued that the artworks were not sculptures when disassembled into their various component parts and crated for shipping. HMRC also sought to persuade the Tribunal that the artistic element of Viola's work was limited to the digital video data or the flat image projected onto the video screen. In other words, that Viola's work lacked the three-dimensional qualities necessary to be regarded as sculpture. Haunch of Venison contended that as a matter of EU customs law (and on the facts), the installations should be treated as being sculptures upon importation. The gallery pointed to favourable precedents, including the Brancusi trial and the classification by the European Court of Justice of a Claes Oldenburg imported into Germany as a work of sculpture (Reinhard Onnasch v Hauptzollamt Packhof (1985). US tax authorities had also confirmed that they would treat the works of Viola and Flavin as sculpture upon importation into the United States. A problem for commercial galleries when importing contemporary art into the UK is that there is currently no general custom category for artworks under EU custom law. While there is a general custom chapter headed ‘works of art, collectors' pieces and antiques', known as Chapter 97, in order to fall within this the imported artwork must fit within a certain sub-category: for example ‘painting', ‘print' or ‘sculpture'. The absence of a residual category for artistic works within this classificatory structure, presents potential difficulties for many types of contemporary artworks, for example, conceptual artworks and installations. If the artwork being imported does not easily fit within one of the sub-categories, the risk is that HMRC will argue that the imported artwork is not covered by Chapter 97, but by another chapter. At trial, witnesses for Haunch of Venison included Sandy Nairne, director of the National Portrait Gallery, Martin Caiger-Smith, independent curator and art critic, and Robert Cumming, writer and art critic. Each explained why Viola and Flavin's installations should be treated as sculpture, emphasizing the way in which Viola specially customizes digital video equipment as well as his precise installation instruction that emphasize their three-dimensional qualities. HMRC conceded during the trial that Flavin's work was a sculpture when assembled (though not when it was disassembled). The Tribunal took into consideration this expert evidence and accepted that sculpture has expanded considerably to encompass novel art forms including video installations. Accordingly, the works of Flavin and Viola should be treated as sculpture at the time of importation. The Tribunal rejected HMRC's argument that whilst the installations may be works of art when assembled, they were not when unassembled or disassembled and packed into crates at the time of importation. The Tribunal, ‘[regarded] it as absurd to classify any of the works as components ignoring the fact that the components together make a work of art.'
The trial provides an important precedent for art galleries and organizations to rely upon when seeking to import the work of international contemporary artists into the UK. Haunch of Venison's success in defending the status of these artworks has clarified the VAT treatment of installation art generally, for the benefit of the British art market.
Withers LLP acted for Haunch of Venison