UK Law and Practice Contributed by: Margherita Barbagallo, Sanskriti Mohta and Nilojana Nirmalan, Dragon Argent
7. Collections 7.1 Legal Status of Collections
The adviser’s legal responsibilities depend on the terms of their engagement. Where a written contract exists, it will typically include an obligation to exercise reasonable care and skill, either expressly or implied by law. A failure to meet this standard can result in liability for breach of contract. Independently of any contract, an adviser may also owe fiduciary duties to their client under English law. These arise from the relationship of trust and confi - dence that characterises the advisory role. Fiduciary duties require the adviser to act loyally, to avoid con - flicts of interest, and to make full disclosure of any commissions or other benefits received from third par - ties. A failure to disclose such benefits may breach these duties even if the advice itself was sound. Advis - ers must therefore be alert to both their contractual obligations and their broader equitable duties of loy - alty and good faith. 6.6 Anti-Money Laundering Regulations and the Art Market An art market participant (AMP) is any individual or firm dealing in, or acting as intermediary for, art transactions of EUR10,000 or more, including auc - tion houses, galleries, dealers and online retailers. AMPs must register with HMRC and comply with the Money Laundering Regulations 2017. Obligations include conducting customer due diligence, maintain - ing records for five years, and reporting suspicious activity. A risk assessment for money laundering and terrorist financing must be prepared and kept under review. Since May 2025, AMPs have also been subject to financial sanctions reporting obligations under the Sanctions and Anti-Money Laundering Act 2018. The main practical challenges include opacity of ownership structures, use of intermediaries, cross- border movement of works, and difficulty with verify - ing sources of funds. AMPs must identify the ultimate beneficial owner behind any transaction and apply enhanced due diligence checks where risks are iden - tified. Failure to comply can result in serious penal - ties, including fines and criminal prosecution, as well as public naming by HMRC, leading to professional reputational damage. A thorough audit trail for each transaction is essential.
In the UK, there is no single, unified legal definition for when a collection becomes “cultural heritage”. Instead, protection is triggered when a collection meets specific criteria under various laws designed to preserve items of national importance. A collection is generally considered protected cultural heritage if it is held by a public institution or if it is privately owned but designated as having pre-eminent significance under specific statutory schemes. The legal framework is a patchwork of different laws and schemes, as follows. Designation and Acceptance Schemes This is the primary framework for privately owned heritage. The AIL scheme allows inheritance tax to be paid by transferring pre-eminent objects (including entire collections) to the nation. For an item to qualify, it must be of outstanding historic, artistic, scientific or local significance. Similarly, the Cultural Gifts Scheme offers tax incentives to living donors who give pre- eminent objects to the public. Once accepted, these items are allocated to public museums, libraries or galleries, placing them firmly within the protected cul - tural heritage sphere. Export Control The exportation of cultural goods is governed by the Export of Objects of Cultural Interest (Control) system administered by Arts Council England. If a collection or individual item is deemed a “national treasure” under the Waverley criteria, an export licence may be temporarily withheld. This creates a “stop” period to allow a UK institution the opportunity to raise funds to purchase it and keep it in the country. Legislation for Public Institutions Publicly funded institutions such as national museums, galleries and local authority museums are governed by their founding legislation (eg, the British Museum Act 1963) or local government acts. These laws impose duties on them to preserve, document and make their collections accessible to the public, effectively grant - ing them protected status. The Ancient Monuments and Archaeological Areas Act 1979 also provides for
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