HMRC has published an updated version of VAT Notice 701/12, which provides detail on which disposals of assets from historic houses (including sales, gifts and reallocations) are within the scope of VAT. This Notice cancels and replaces the version from January 2002.

Assets sold from an historic house used as a private residence are not normally business assets and therefore sales of these are outside the scope of VAT. This also applies to house clearance sales.

If admission is charged for access to the house, it will be considered as being used for business purposes. Where the business is VAT-registered there is a presumption that any assets (including furniture, antiques and works of art) on public display are, for the purposes of VAT, business assets. As such, they will be within the scope of VAT when disposed of. It is possible to choose to treat an asset as a private asset at the point of acquisition, or to take a business asset outside the scope of VAT by reallocating it as a private asset.

Where assets are freely lent to another historic house that charges for admission the assets are not treated as business assets by the business owner, as they have not been used for business purposes. There is no need to account for VAT on their disposal.

If a business asset is sold, it is normally liable to VAT at the standard rate. However, an exemption from VAT applies when the business asset is:

• an antique or work of art
• exempt from capital taxes

A business will only need to register for VAT if the turnover from all taxable business activities reaches the VAT registration threshold. Exempt income does not count towards the threshold. It is also not necessary to register if the threshold is only surpassed because of the occasional disposal of a business asset.