17
“HMRC classes some wines as a wasting asset and consequently, not liable to Capital Gains Tax”
TAX BENEFITS
HMRC classes some wines as a wasting
asset – defined by HMRC as one “whose
predictable life, from the point of view
of the person acquiring it, does not
exceed 50 years”
36
and consequently,
not liable to Capital Gains Tax. This is
clearly a significant benefit as it provides
a 28% saving to a higher rate tax payer
on any profits on the sale of wine
inventory. That said, the CGT exemption
to fine wine is by no means guaranteed:
the position in regard to cheap table
wine is clear as HMRC states that it,
“may turn to vinegar within a relatively
short period, even in unopened bottles”
but that port and fortified wines which
are generally recognised to have a
very long storage life, are certainly
not wasting assets. This leaves a grey
area in between, however, the normal
contention is that wine is not a wasting
asset if it appears to be fine wine which
not unusually is kept (or some samples
of which are kept) for substantial
periods sometimes well in excess of 50
years. However, that is not necessarily
the end of the issue as, even if a
particular bottle of wine is not a wasting
asset, then any gain accruing on its
disposal may nevertheless be exempt
where the disposal proceeds for that
single bottle do not exceed £6,000.
37
Where however, a number of bottles
are sold to the same person in one or
more transactions, then the question
might arise as to whether the bottles
themselves constitute a “set”. If they do,
then the £6,000 limit would apply to the
overall sale proceeds rather than the
price fetched for any individual bottle.
38
In addition, client wine reserves
stored in bond are VAT-exempt as
they are considered ‘in-transit’.
However, if wines are removed from a
bonded warehouse they will become
liable for VAT and Excise Duty.
1978
WORLD RECORD
HONG KONG NOV 2013
12 BOTTLES
$
476,280
PER BOTTLE
$
39,690
