The diminishing returns from Croydon Council’s auctioning of part of the borough’s Riesco Collection of ancient Chinese porcelain look to be diminishing by the day, with a hefty tax bill now in the offing.
After tax, auctioneers’ commissions and other costs, the Tories who run Croydon Council could be left with £10 million less than what they first thought they would grab from the unlawful sale, which went ahead last month against the advice of the council’s own lawyers.
According to official sources at Her Majesty’s Customs and Revenue, where death duties are levied at 40 per cent, Croydon Council may yet have to hand over up to £3 million in tax from the £8.2 million raised at the auction in Hong Kong.
The council’s auctioning of the items overseas was in breach of a 1959 agreement with HM Treasury which gave the donor of the collection, local businessman Raymond Riesco, an exemption on his death duties.
That agreement stipulated that in order to obtain the tax exemption: “The Corporation shall undertake with the vendor or his executors as follows: (a) the Riesco Collection will be kept permanently in the United Kingdom and will not leave it temporarily except for a purpose and period approved by the Treasury; and (b) reasonable steps will be taken for the preservation of the Riesco Collection.”
A Treasury spokesman told the Museums Journal: “Conditional exemption from estate duty was in place in 1959 and the sale of an object that had been exempted would bring the exemption to an end – as would taking the item out of the UK without permission.”
According to a report in the Museums Journal, the Treasury official said that any estate duty claim would “extend to the open market value of the object at that time”. Under current tax law, anything over the first £325,000 is taxable at 40 per cent.
Thus much of the work done by Riesco, his lawyers and those solicitors working for Croydon Council more than 50 years ago to keep the collection in tact, and to avoid breaking up the Riesco estate at Heathfield House, looks to have been undone by the greedy burghers who run Croydon Town Hall today.
Adding a multi-million pound tax bill on top of the other claims on the proceeds of the auction could end up leaving Croydon with barely one-third of the sum they through they could make from their pawn shop sale.
Tim Pollard, the deputy leader of the Conservatives on the council who pushed through the sale against their own legal advice, had originally suggested that £13 million would be raised from flogging off 24 pieces of the collection from the borough museum.
Someone, somewhere, either got the valuations all wrong, or just got plain greedy.
When the auction took place, seven of the pieces failed even to reach their reserve prices.
Then there are various costs to deduct, including the auctioneers’ commission. The seller’s commission can be as high as 20 per cent of the sale price – so that’s another £1 million or more to be deducted from what Croydon will receive.
Croydon Council is refusing to say what terms were agreed with auction house Christie’s, on dubious grounds of “commercial confidentiality” – if commercial companies expect to be paid fees from public money, then the public has a right to know how much, and for what goods or services.
Our Tory-run council may yet again be shown to have acted unlawfully and broken its own procedures and policies: all council contracts worth more than £1 million are supposed to be approved by a meeting of the full council. The Christie’s deal never was.
- Riesco objections: Croydon Council’s squandering our heritage
- Is Croydon on the brink with £1 billion borough debt?
- Costs force campaign to abandon Riesco legal case
- Museums Association kicks out Croydon over Riesco sale
Coming to Croydon
- Cinema Ruskin: Dec 21
- Surrey Street Christmas market, Dec 22
- Community Carol Service, ACA, Dec 22
- STDLCC Screening: Now You See Me, Dec 27
- STDLCC Screening: Kolya, Dec 30
- Steve Knightly at Stanley Halls: Feb 5
- Purley Swimathon: Feb 8 and 13
- Inside Croydon: Croydon’s only independent news source, based in the heart of the borough – 262,183 page views (Jan-Jun 2013)
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