There has been a mountain of correspondence from readers who have written to me, each with a different problem. First, I must apologise for not yet having replied to the less urgent enquirers (I will, shortly); second, let me now deal with a sample, representative of the most common queries raised.
Where there’s a will…
A sculptor in his late seventies wants to know how to arrange his affairs, bearing in mind his awareness that death is not too far away. He now sells very little, continues to make work, and has a lot of work accumulated in his studio.
As regards current income from sales, he should, of course, continue to make an income tax return each year, showing his profit or loss as a business. If this is not being done, his local tax inspector will be able to give advice on how to draw up a statement of business income and expenditure for the tax year. Moreover, the tax inspector will also be able to advise the sculptor on the position regarding any artwork given away before death or undisposed of at death -capital transfer tax may well be payable for transfers of work (and, for example, a studio and equipment) exceeding a total of £60,000 in capital value at 1985 rates.
Copyright in the work should also be considered. Assuming that the sculptor owns the copyright in his work, then at his death the copyright will pass to the person entitled to inherit his personal property – copyright passes on as if it were a movable object-unless, of course, he makes a will giving clear instructions about what should happen to his work. If he makes will and leaves specific works to name beneficiaries without mentioning copyright, then the law will pass the work and the copyright to the recipient; likewise, if a group or all of the work is left in the will without separately dealing with copyright. However, he may wish to send the work in one direction and the copyright in another; this he is free to do. Some artists for example, execute wills giving specified works to named bodies, and their copyright in those works to different named trustees. It should be remembered that copyright in sculpture lasts for fifty years after the maker’s death.
Putting these two issues together – disposal of copyright and of the works themselves before or on death – the sculptor would be well advised to decide what he wants to happen after death, then to consult a solicitor experienced in such matters and draw up a will giving effect to his wishes. An accountant will be able to advise on the tax questions, if necessary.
Income tax; Schedule D status
Convincing tax inspectors that a practitioner is a professional and not a ‘hobbyist’ (their word), despite the perennial making of losses, and that he or she should be taxed like any other person practising a trade, profession or vocation, can be a problem, especially where the inspector has no experience of dealing with visual artists.
It is not just a problem in the UK alone. The Canadian Artists Representation (CARO) has recently been pressing their Revenue office (Revenue Canada Taxation) to improve the income tax rules for visual artists. It may interest and possibly help UK artists to note the following guidelines issued by Revenue Canada Taxation for evaluating whether or not an artist has a reasonable expectation of profit (this profit motive is similarly applied by the Inland Revenue to artists in the UK). Relevant factors will include: time devoted to the activity; extent to which the taxpayer has exhibited his work both in group and private exhibitions; extent to which the taxpayer is represented by private art galleries or dealers; planned or intended course of action, including recent sales of significance, plans for exhibitions, efforts to increase representation by galleries and dealers, recent commissions for work, receipt of government grants and continuous losses; taxpayer’s efforts to promote the sale of works; type of expenditures, i.e. whether a substantial portion of expenses are applicable to research, promotion, and direct cost of works or alternatively, whether the expenses are primarily those that would be expended irrespective of the taxpayer’s art activities, e.g. office in home and auto expenses; increase, if any, in the value of the artist works as he/she progresses; taxpayer’s qualifications, i.e. his/her educational background, honours, awards, grants etc. significance and growth of gross revenue; external factors which may be affecting sales e.g. economic conditions, change in the public mood and bankruptcy of art galleries profits in prior years or continuous losses.
(Information drawn from the CARO Bulletin. For further information contact: CARO, 345-67 Mowat Avenue, Toronto, M6K3E3, Canada. Phone: (416) 534
Working on Supplementary Benefit
A painter who claims Supplementary Benefit needs to know if there is any time when she is not expected to be ‘available for work’.
In order to claim this benefit you first have to register with the Department of Employment as being available for full-time work. Having done so you can then claim supplementary benefit from the DHSS office to meet your basic living requirements. If, whilst registering your availability for work, you spend some of your time (when not looking for employment) painting – especially with a view to selling work and (with luck) receiving income which will enable you to cease claiming the benefit – then you are perfectly free to do so. What you cannot do is to spend all your time painting and not looking for work.
She also asks how to deal with any income from sales received whilst claiming benefit. This can be a tricky area. The first thing to do is open a separate current business bank account and use it for depositing all business income and for paying out all business expenditure. This will enable her to prove (to her tax inspector, as well as the DHSS) what monies have passed through her hands in an attempt to set up her business and come off the unemployment register. Secondly, she should declare to the DHSS any income she receives from sales, explaining how they came about, because it is possible for her to be allowed to use the income to buy more materials in order to generate further income, eventually reaching a point where there is sufficient profit from sales to live on without claiming Supplementary Benefit; and that is the time to ‘sign off’ the unemployment register. Moreover, at that stage she should apply to the DHSS for a small earnings exemption certificate, which will be issued if she declares that her likely self-employed income during the tax year will not exceed roughly the equivalent of her personal tax allowance. This certificate will exempt her from having to buy a weekly self-employed National Insurance stamp. If her income does eventually exceed the small earnings exemption limit during the tax year, then she will have to pay the contributions for the whole year in arrears.
So far as income tax is concerned, she should still make a tax return at the end of the tax year, including a statement of business income and tax deductible expenditure – probably, therefore, showing a loss whilst receiving Supplementary Benefit, thus paying no income tax and, where it does show profit, paying the appropriate amount of income tax assessed by her tax inspectors. During a year where profits are being made she would be sensible to put sufficient cash in a deposit account to pay the tax bill at the year-end after her return has been made and assessed.
DHSS officers and tax inspectors are usually very helpful if artists take these problems along for advice and help. Everyone would be well advised to do so, and certainly not plough on thinking they are doing the right thing when in this very tricky area they could well be doing the opposite.
An artist is the subject of a video film being made by others for a public body, and he wants advice on his interests regarding its showing.
There are two immediate areas of concern: his personal appearance on camera; and that of his work. At this stage, he should try to find out and then discuss with the makers, at least the following: who will own the ‘rights’ in the video – rights to copy, show, sell, broadcast and so on; how long those rights are intended to last and be used; over what geographical territories they will be used; and the intended marketplace for the video and its exploitation. He should then, if not earlier, consult a solicitor versed in film and visual art copyright matters, in order to negotiate and put into writing how much the artist is prepared to perform on camera (be seen, speak, work, and so on) and how he wants which particular works shot for the video; in consideration for which he should be able to agree with the video makers a flat fee for his co-operation in the project, and/or a percentage/royalty of any income derived from the making and marketing of the video – for defined period of time and over defined territories.
A hitherto amateur artist, principally producing drawings, finds herself becoming professionally committed and wants to join some form of association which would advise her on the legal and business aspects of practising.
The Association of Illustrators (1 Colville Place, London, W1) may well be able to help, and/or the National Artists Association (PO Box 23, Sunderland, SR4 6DG); plus, for copyright protection and enforcement, there is DACS (see below, for address).
Verbal agreement to sell
A painter verbally agreed to sell two works to a large company which now refuses to accept delivery and make payment; a simple, albeit perennial, problem.
The simple answer is that a sale agreement is legally binding, even though it was made verbally and without any witnesses or other corroboration. In such situations, it is often said that there is no proof of the sale; true, but the artist can still prove his case simply by (eventually) giving evidence on oath before a judge in the civil courts. If the judge considers it more likely than not that the artist is in the right then he should make an order in the artist’s favour accordingly. Obviously, it is always best to note all sales in writing at the time of the agreement, thereby avoiding any ambiguities including complete denial of the agreement later.
© Henry Lydiate 1985.