The art market is notoriously secret. It was, until January 2020 one of the most unregulated sectors in the world. However, HMRC has now become its new watchdog in the UK.
On 7 February 2020, HMRC published its approved guidance on anti-money laundering for UK art market participants (by the British Art Federation).
The new regime follows on from developments in July 2018 when the 5th Anti-Money Laundering Directive was adopted by the EU. Following legislation to bring the Directive into UK law by amending the Money Laundering Regulations 2017 and the Proceeds of Crime Act 2002, and with effect from 10 January 2020, strict anti-money laundering obligations will apply to many art traders and intermediaries who carrying on business in the UK .
HMRC's new guidance is divided into part I (overview) and part II (guidelines). It remains mere guidance and is not legally binding in itself. Part I explains the scope and purpose of the new regime. It gives a general overview of the legislation, the scope and what needs to be done to be compliant. Part II sets out a comprehensive analysis of the regulations.
In summary:
Given the high value of some artworks and the international market in which they are traded, it is not surprising that this word is increasingly becoming the focus of tax authorities.
It remains to be seen to what the extent of HMRC’s role, how it will seek to enforce its new powers and whether HMRC will operate a soft touch period to become compliant.
The art market is notoriously secret. It was, until January 2020 one of the most unregulated sectors in the world. However, HMRC has now become its new watchdog in the UK.
On 7 February 2020, HMRC published its approved guidance on anti-money laundering for UK art market participants (by the British Art Federation).
The new regime follows on from developments in July 2018 when the 5th Anti-Money Laundering Directive was adopted by the EU. Following legislation to bring the Directive into UK law by amending the Money Laundering Regulations 2017 and the Proceeds of Crime Act 2002, and with effect from 10 January 2020, strict anti-money laundering obligations will apply to many art traders and intermediaries who carrying on business in the UK .
HMRC's new guidance is divided into part I (overview) and part II (guidelines). It remains mere guidance and is not legally binding in itself. Part I explains the scope and purpose of the new regime. It gives a general overview of the legislation, the scope and what needs to be done to be compliant. Part II sets out a comprehensive analysis of the regulations.
In summary:
Given the high value of some artworks and the international market in which they are traded, it is not surprising that this word is increasingly becoming the focus of tax authorities.
It remains to be seen to what the extent of HMRC’s role, how it will seek to enforce its new powers and whether HMRC will operate a soft touch period to become compliant.