Royal estate business tax bill reduced by artwork
The body which manages the Queen's property portfolio avoided paying tax on one of its buildings after allowing art to be displayed there, a BBC Inside Out investigation has found.
The artwork on show at the Duchy of Lancaster's building in Harrogate currently features bin bags and tin foil.
The office building at 11 Ripon Road, which has an annual business rate fee of about £16,000, has been empty for nearly three years.
In 2011, the building was let out to ACTE Arts twice.
Josh Artus, from ACTE Arts, told the BBC during a secretly recorded telephone conversation that the company was based on "helping its clients manage their empty rates liabilities".
But the Duchy of Lancaster said the building was being used to support artists who did not have the financial resources to exhibit their work.
ACTE Arts occupied the property last year between 14 March and 28 April and between 29 July and 16 September.
During that time the group paid full business rates which were then reimbursed by the Duchy.
On both occasions when the organisation vacated the building, the Duchy received three months' tax relief.
Under tax law, once a business property becomes empty, the first three months are exempt from rating after which the full 100% rates are applied.
Mr Artus said: "There are a lot of cases being fought against particular companies illegally doing things.
"We do occupations of property.
"We don't just stick a bunch of boxes in a room and make up a fake company. We have operations in the building."
Tax expert Stuart Hicks said it was problematic if landlords were operating in such a way to reduce rates.
"The economy at the moment is very difficult and landlords holding empty property are suffering," he said.
"It is common for people to try and reduce the costs of holding property. In some cases it's a matter of survival."
He added: "The most obvious thing that people have done is to occupy property for a period of time and then claim relief after that occupation.
"The problems that can arise are if a property is not occupied genuinely or alternatively for the purpose for which a property is there."
When asked about the artworks featured in the Harrogate building, Mr Hicks said: "I'd be concerned that the occupation wasn't genuine, in which case the billing authority could seek to take action to recover the monies that have been claimed."
The Duchy said a new lease was given to ACTE Arts on 20 January and would run until 19 June.
In a statement, it said it sought to "use empty properties in the most effective manner possible pending reletting or redevelopment".
It said a planning application had been approved to convert the Harrogate property into residential accommodation but it would be some time before work started.
The Duchy said: "The building is being used to support artists who do not have the financial resources to exhibit their work in commercial galleries and for the benefit of the local community.
"We believe this is a more socially responsible option than leaving it vacant."
See more on this story on BBC Yorkshire's Inside Out programme at 19:30 GMT.