Reassessment - Part 1

Anyone reading this blog since I started writing it shortly after Dave Pearson's death in the summer of 2008 will remember that one of the biggest issues we (the Dave Pearson Trust) faced in the early days was the problem of valuing his work for Estate Duty. The problems we had to overcome were complex, if not exactly unusual with artist's estates, and for those reasons I started recording our progress in this blog.

Dave sold work throughout his life, but it was never a preoccupation. He earned enough from lecturing to cover his needs, and ultimately preferred to spend his time painting than bothering too much about galleries, or his reputation.

Like many artists he died leaving behind a lot of work. In his case an awful lot. I estimated between 14,000 and 20,000 pieces at the time, and at this point, after several years of careful cataloguing, we've archived 12,000 pieces. The likely final number will be about 16,000 pieces.

Because Dave had not sold anything in the 5 years prior to his death there was nothing to base value on. I approached two reputable companies who specialised in valuing art works and estates. When I described the situation they lost interest. I couldn't get anyone to visit the studio and take a look. In the end the Inland Revenue accepted a very low figure - £5000 I seem to remember – which did little more than reflect the value of the canvas, wood paper and paint left behind in the studio.

But the story doesn't end there. There's a '10-year rule', and every 10 years the value of an estate, if its held in trust, is reassessed, and tax rules are re-applied. At this point working it out gets extremely complicated as various rules, involving percentages of percentages are applied. If there's a a significant increase in value, then Capital Gains Tax might also apply.

After the first few years, and after the Inland Revenue wrote to say that they accepted our valuation, we've let things lie. But now, with less than two years to go before the 10 year anniversary, we've had to start thinking again about our valuation issue. It's frankly too complex a subject for any of the Trustees to handle, and even our decent local solicitor has recommended that we seek specialist advice.

There's an irony in the underlying situation in that we formed the Trust to save Dave's work, and help to foster and develop his reputation. It's meant archiving and safely storing the work, and this has meant that we've sold work in order to cover our costs. No one makes money from this – we employ a part-time archivist, and we pay rent on the studio. Any income beyond this will, in the end, go to Dave Pearson's son.

By doing the work we're doing, however, we've inevitably considerably increased the value of the work. So its clear that today a valuation would have to be considerably higher than the initial £5000. If we say that the 15,000 pieces left were worth an average of £50 each, then the estate would be valued at £750,000 – a huge increase, with god-knows-what tax implication. But of course nearly all of this work lies in storage – the value is only potential value, IF it were all sold. In any case that £50 is probably rather low. So this is where the negotiations really begin, and why – after looking through the very useful Artlaw pages online (http://www.artquest.org.uk/artlaw/) - we're about to go and talk to a solicitor who specialises in this kind of thing.

To be continued...soon.