Chattels sold at auction
The person valuating the chattels has two main responsibilities. First, is to correctly identify and catalogue the item being sold. This is to make sure that any potential buyers are properly informed of the item being sold so as to avoid confusion and getting less than your expected price. Make sure to clearly display any special identification markers or initials for items such as vases or other collectibles.
The second responsibility of the valuer is to make a correct price estimation for the item. Auctioneers tend to start the reserve low, in the hopes that the low price would tempt buyers to bid and hopefully create a perception of value for others to follow suit. It is a best to make a realistic reserve just in case the only one person bids on the item. Many dealers are aware of this and can estimate their unwanted items high from the outset.
When making the sale at an auction, the valuer must make sure that the item is accurately catalogued, negotiate any commission discounts and auction reserves. Some auction houses have safeguards against people abusing commission rights, by providing private treaty sales services. This is why it is vital to make sure that you use a reputable and experienced valuation service.
Even when using professional services, one must be careful to protect their assets and have them insured against any potential fraud or embroidery.
Other methods of selling chattels
If you don’t want to sell through auctions, you could always sell the item to a private dealer or institution. This could either be a direct sale or a commission based agreement between yourself and the dealer.
Sometimes, if the valuer knows their market well, they could potentially want to directly buy the item themselves.
Acceptance In Lieu (AIL)
The Acceptance on Lieu scheme is a clause that allows taxpayers to transfer important heritage property into public ownership upon payment of the IHT. The details of the scheme can be fairly complex but any competent valuer should be aware of this scheme. ‘Important heritage property’ is a term that covers quite a broad spectrum. It is advisable to get in touch with a local museum or specialist dealer that is approved by the scheme, in order to possibly apply the scheme upon the owner’s death.
There are some drawbacks however, the offer of the heritage item must be made before the IHT is paid. Also, since the definition of heritage property is so wide, the owner would need to do some lifetime planning for the scheme. Many wills will state specific gifts of personal chattels in order to avoid the income tax rules upon distribution. Usually, the person who applies for heritage property should be the same person who is liable to pay the IHT, therefore it may be a good idea to leave the heritage property in the residue of the estate.
The AIL scheme will require details of the history or provenance of the object. The documentation would need to have been done when the owner was alive. It is possible to do after the owner is deceased, but it would be significantly harder to trace the history of the item after the fact. The executor can be assured that the item will not be undervalued when sold to the nation. A specialist panel for the AIL would be the one making the decision on behalf of the state, and they have a duty to be fair and impartial. Usually, there is also room for negotiation regarding the value.
Since matters of estate frequently deal with items of great financial and sentimental value, advisers and other valuation professionals have to be careful to properly inform their clients of all the options and pitfalls regarding the disposal of these items. To be careless or negligent about the laws and regulations can lead to criticism, or worse legal action.
For details and examples on how to calculate chargeable or net gains on sold chattels, after IHT, CGT and VAT; refer to HMRC documents CG 76577 and CG 76612.