Yesterday I went to our solicitor with Chris Pearson to review the current position with regard to the Estate Duty and the current tax situation of the Dave Pearson Trust.
Our solicitor repeated that we're in a very unusual situation. We took professional advice and that was that Dave's work was almost valueless 'at the time of death', which is the way that an Estate is valued in law - 'at the time of death'. Because Dave had sold no work during the last years of his life there was no sales history for a valuer to go on. Chris repeated that normally he would have kept as many painting as he could in order to remember his father; given some to family and friends, and the rest would have gone with the studio in some version of a house-clearance, i.e. been destroyed. In that context the valuation Chris gave, with the advice of a professional probate valuer and his solicitor (£5,000), was probably accurate.
But that didn't happen. Instead Chris gave the work into a Trust which is managed by me (Bob Frith), Margaret Mytton, and Chris himself. Anyone who has followed this blog will know the efforts we've gone to in order to enhance Dave Pearson's reputation. In the course of doing this, inevitably, the value of the work has increased and the work now clearly enjoys a much higher value. The story has been taken up my the press, and they have quoted a value in 'millions'. It's this that the HMRC have got hold of and so asked to look again at the Estate.
So we agreed that our solicitor will reply to HMRC, repeating the facts of the case, and the reasons why the estate was valued the way it was 'at the time of death'. It could be that HMRC will send in a specialist; whatever they do it will probably take some months. The wheels of the taxman turn slowly.