ECSH54525 - Introduction to art market participants
Source: gov.uk (2025-03-08)


When did art market participants come into scope?

Art market participants (AMPs) came into scope of The Money Laundering Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) on 10 January 2020.

AMPs had until 10 June 2021 to register with HMRC for supervision, so whilst AMPs must abide by their obligations in the MLR 2017 from the 10 January 2020, they cannot receive a trading whilst unregistered penalty for activity before 10 June 2021.

Definition of an AMP

AMPs are defined in regulation 14(d) MLR 2017 as:

(d)“art market participant” means a firm or sole practitioner who—

(i)by way of business trades in, or acts as an intermediary in the sale or purchase of, works of art and the value of the transaction, or a series of linked transactions, amounts to 10,000 euros or more; or

(ii)is the operator of a freeport when it, or any other firm or sole practitioner, by way of business stores works of art in the freeport and the value of the works of art so stored for a person, or a series of linked persons, amounts to 10,000 euros or more.

(e) “freeport” means a warehouse or storage facility within an area designated by the Treasury as a special area for customs purposes pursuant to section 100A(1) of the Customs and Excise Management Act 1979 (designation of free zones).

Types of AMP

AMPs may include (but are not limited to): art galleries, auction houses, online sales platforms, interior designers and art rental companies, when they buy or sell works of art over the threshold.

More information on specific types of AMP is available in ECSH54550 (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh54550).

The definition also includes freeports. For more information on freeports see ECSH54750 (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh54750).

Exclusions: artists selling their own work

Artists selling their own work, whether as an individual/sole practitioner or through a business they own, are not within the scope of MLR2017, and so are not required to register as an AMP (Regulation 14(3) MLR 2017). This extends to sales of an artist’s own work through their business, (but not for sales of other artists’ work sold through another artist’s business) and sales of an artist’s work by someone employed by the artist, or the artist’s business.

Similarly, sales directly out of an artist’s estate, of works created by the artist, are not within scope of MLR2017. This would not apply if an intermediary was used to sell them, such as an auction house, as they would be an AMP themselves.

Exclusions: framers, shippers and non-active participants

An individual or business who does not actively participate in a sale or purchase of a work of art, such as framers or shippers, are not within scope of the MLR2017. This includes a person or business that just provides contact information for a prospective buyer or seller, without getting involved in the sale, or art advisors that do not receive a fee.

Some art galleries are also registered charities. Most registered charities do not operate “by way of business” so are not within scope of the MLR2017. However, if a charity has a trading arm as a separate legal entity, they may be an AMP. For more information on charities see ECSH42575 (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh42575).

Intermediaries

An intermediary is someone who, by way of business, actively transacts in the sale or purchase of works of art on behalf of a seller or buyer under whose authority they act. “Actively transacts” means where an individual or business facilitates the sale or purchase of a work of art for a fee.

An intermediary could be an art gallery, a dealer or an online sales platform, or anyone else paid by the seller or buyer for whom they act.

Online sales platforms will be an intermediary if they receive a commission, fee, or a percentage of a sale value. This could include online sales platforms that are based outside of the UK but act on behalf of UK customers.

Works of art

Regulation 14(f) MLR 2017 defines a work of art as: “anything which, in accordance with section 21(6) to (6B) of the Value Added Tax Act 1994 (value of imported goods), is a work of art for the purposes of section 21(5)(a) of that Act”.

For more information on works of art see ECSH54575 (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh54575).

Calculating the value of transactions

The value of a work of art is calculated as the final invoiced price for the work of art including taxes, commission, and any ancillary costs (such as delivery charges on the same invoice).

The value of a work of art sold at auction is calculated as the hammer price including taxes, commission, and any ancillary costs.

Linked transactions

The 10,000 euros limit applies not only to single transactions but also to linked transactions totalling 10,000 euros or more, or where the transaction appears to be deliberately broken down into several payments below 10,000 euros.

HMRC considers multiple payments against a single invoice, which together exceed the 10,000 euros threshold, to be linked, regardless of how long it takes to make payment.

Likewise, multiple separate invoices within a short amount of time would also be considered to be linked.

Occasional transaction or a business relationship

Under MLR 2017, a purchase or sale for an AMP can either be by way of an occasional transaction or by way of a business relationship. A lot of sales and purchases in the art market are likely to be occasional transactions, on the basis that there is no obligation or commitment on the customer to use the services or buy goods again or form an ongoing relationship with the AMP.

A business relationship in the art market is a business, professional or commercial relationship between a business and a customer, which the business expects, on establishing the contact to have an element of duration. This could be a contract to provide regular services, e.g., a buyer asks a dealer to source multiple paintings of a style for their art collection over a period or from a specific artist. Receiving marketing materials or attending events, such as gallery openings, does not constitute a business relationship.

Primary and secondary art

Works of art can be split between a primary trade and a secondary market. The primary trade refers to when artwork comes to the market and is sold for the first time. Artwork that is sold for the second time or any subsequent sales come into the secondary market. The primary trade is almost all contemporary art works by living artists or those that are recently deceased. This is when the artist, normally in conjunction with an art dealer or gallery, establishes a selling price based for the first-time sale. The basic principles of supply and demand apply to the price of the art: generally, the greater demand for an artist’s work, the higher the price they could charge.

Primary art is often on a sale or return basis. For example, an artist paints several pieces of art and has an agreement with a gallery to advertise them and try to sell them. This is done on a sale or return basis, normally on a specified time limit. This could be, for example, for three months, after which any pieces not sold by the gallery, will be returned to the artist.

Main genres of art

Within the art market there are different styles of art that is bought and sold, categorised into six broad genres. Many AMPs, such as art dealers will specialise and only deal in one of these areas. The more modern art, such as contemporary art, has more price fluctuations than older art. The six genres are:
- Post war & contemporary, defined as artists born after 1910.
- Living artists is a sub-set of the Post War & Contemporary sector, defined as artists, whether still producing works of art or not, who are still alive.
- Modern, defined as artists born between 1875 and 1910. (These include artists such as Pablo Picasso, Amedeo Modigliani, and Marc Chagall.)
- Impressionist and post-impressionist, which are defined as artists born between 1821 and 1874. (These include artists such as Claude Monet, Edvard Munch and Henri Matisse).
- Old masters, defined as artists born between 1250 and 1821. This sector covers artists of all nationalities and includes Chinese Masters (such as Ren Renfa, Wu Zhen, and Wang Duo) alongside all other Old Master painters.
- European old masters, defined as old master artists of European origin, which are analysed separately as a sub-set of the old master sector. (These include Peter Paul Rubens, John Constable, and Rembrandt).
It is important to be aware of different genres and broad values of art in order to identify suspicious transactions.