Essentially, our concern to secure works of art for the United Kingdom collections and public is dealt with through private treaty arrangements that, in our experience, work perfectly effectively. Such arrangements are used to secure
works of art that are heritage assets to museums and galleries. There is no capital gains or inheritance tax liability on a private treaty sale, and the terms of the deal include what is called the douceur, so that some of the tax break goes to the vendor. Furthermore, living artists who donate their works to a museum, gallery or any other charity can get income tax relief for the gift through the relief for gifts of trading stock.
The right hon. Member for Fylde (Mr. Jack) asked about gifts and private treaty sales. In private treaty sales, valuation questions generally do not arise, because the value is agreed between the two parties. It is a differently structured process of valuation than would be the case if the scope of the provision were widened by both sets of amendments.
Therefore, it is difficult to see how an income tax relief for gifts of works of art, on top of the existing tax breaks, would have a significant effect in increasing gifts of such assets. The hon. Member for Arundel and South Downs made it clear that he is concerned about works of art not ending up in the national collection. I share the sentiment, but the operation of his amendments may actually work counter to what he is trying to achieve. In some cases, his proposal may work against the interests of the UK's heritage.
The taxpayer's favoured charity would be under the usual obligation to maximise the benefit of the gift in the furtherance of its charitable objectives, so it might have no option but to arrange for the work of art to be auctioned. If a foreign museum bought it, the work would be lost to the UK. By comparison, an aim of the inheritance and capital gains tax reliefs for gifts and private treaty sales to qualifying UK institutions—not just museums and galleries but university libraries, heritage bodies and others—is to keep assets in the UK for the benefit of the public.
The hon. Gentleman rightly anticipated my response to his amendments, although he was not entirely right in anticipating my arguments and concerns. If he returns to the matter in future years, as he promised, perhaps he might examine my comments to determine whether there are good grounds for his concerns.
The generous reliefs that are already in place provide adequate incentive for donors to give assets of a kind that charities can retain or easily liquidate. The reliefs are simple, straightforward and well defined. Therefore, I encourage the hon. Members for Kingston and Surbiton and for Arundel and South Downs to withdraw their amendments. If they are not prepared to do so, I ask my hon. Friends to reject the amendments.