13 January 2009

Stop Press: Haunch of Venison Partners Limited v HM Revenue and Customs


The VAT and Duties Tribunal (England) has ruled that installations by leading contemporary artists Bill Viola and Dan Flavin must be regarded as sculptures for VAT and customs duties purposes. This decision means that Haunch of Venison, the importing gallery, will be liable for VAT at a reduced rate of 5% and will not be liable for customs duties.

The dispute began after Haunch of Venison imported contemporary artworks by US video installation artist Bill Viola into the UK, and signalled their intention to import a light sculpture by the US minimalist artist, Dan Flavin. Sculptures are charged upon importation in the UK at a reduced rate of 5% and are not be liable for customs duties.

HM Revenue & Customs (HMRC) claimed that the artworks by Viola and Flavin could not be categorised as ‘sculpture' for import purposes. They argued 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 (currently 15%). HMRC further argued, to the gallery's dismay, 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 the Tribunal's hearing in September 2008, HMRC argued that the artworks were not art when disassembled into their various electrical 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 sculpture upon importation.

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, gave evidence in support of the gallery. They explained why Viola and Flavin's installations should be treated as sculpture. In particular, it was demonstrated how Viola specially customises digital video equipment in order to maximise the artistic impact of his installations and how his video screens are installed (according to precise instructions) in order to emphasise their three dimensional qualities.

The Tribunal accepted in its decision that sculpture has expanded considerably during the 20th and 21st centuries to encompass novel art forms including video installations and that accordingly, the work of Flavin and Viola should be treated as sculpture.

Haunch of Venison was represented by Withers LLP.

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