Worked Ivory Update

The Department for Environment, Food and Rural Affairs (DEFRA) is seeking views on banning UK sales of elephant ivory that could contribute either directly or indirectly to the continued poaching of elephants, and seeking evidence on the effect this change will have. This includes the effects of such a ban on elephant conservation, the natural environment and businesses, as well as its economic and cultural effect.  The consultation applies to England, Scotland, Wales and Northern Ireland, but welcomes responses from organisations and people based outside of the UK. The consultation ends on 29 December 2017.

This consultation has particular relevance to:

  • Individuals or groups with an interest in elephant conservation
  • Individuals or businesses who buy sell, import and export ivory
  • Individuals who own ivory goods and may have an interest in buying/selling them in the future
  • Associations or organisations representing businesses or individuals who buy and sell ivory
  • Businesses or organisations with a commercial interest in the preservation of elephants 
  • Governments who are considering measures to restrict their own domestic ivory markets

Currently, the international trade in ivory is controlled by rules set by the Convention on the International Trade in Endangered Species (CITES). These rules are implemented in the UK through EU Regulations. The Animal Plant and Health Agency (APHA) is the UK’s CITES Licensing Authority. Traders must apply to APHA for the appropriate permits or certificates if they want to:

  • import or (re-) export items containing ivory from/to a country outside the European Union
  • use ivory in commercial activities within the EU

The UK’s policy is not to issue documents authorising the sale of, or other commercial trade in raw African Elephant ivory of any age. At the moment, for worked ivory items produced before 3 March 1947, traders do not have to apply to the APHA for certificates to authorise trade in ivory within the UK or other EU countries, but a permit is needed to import/re-export ivory outside the EU. And already, for worked ivory items produced on or after 3 March 1947, commercial use within the UK or other EU countries is only permitted with a commercial use certificate granted by a Member State Management authority (for the UK, this will be the APHA). Issuing of certificates is subject to case by case assessment. Under CITES, there has been a ban on international commercial trade in ivory since 1990.

Commercial use covers purchase, offer to purchase, acquisition for commercial purposes, display to the public for commercial purposes, use for commercial gain and sale, keeping for sale, offering for sale or transporting for sale. Worked specimens is defined as specimens that were significantly altered from their natural raw state for jewellery, adornment, art, utility, or musical instruments, more than 50 years before the entry into force of this Regulation and that have been, to the satisfaction of the management authority of the Member State concerned, acquired in such conditions. Such specimens shall be considered as worked only if they are clearly in one of the aforementioned categories and require no further carving, crafting or manufacture to effect their purpose

The proposed ban would seek to go significantly further. It is proposed to prohibit ivory sales in the UK, and to prohibit the import and export of ivory for sale to and from the UK. By sales is meant the sale, offer of sale, purchase, offer to purchase, keeping for sale and transporting for sale. Imports and exports for sale will also cover intra - EU trade to and from the UK. 

Four narrow exemptions are proposed. These would be for musical instruments: items containing only a very small proportion of ivory; items of significant historic, artistic or cultural value, and sales between museums.

It should be noted that there is no definition offered of what might constitute “significant artistic, cultural or historic value” but the proposals clearly envisage that any exemption of this kind would need to be strictly defined to ensure that only the rarest and most important items are exempted. Questions also arise over the creation of a “de minimis” exemption which recognises that in some items the ivory content is incidental to the attraction and value of the item. Items in this category could be pieces of antique, ivory inlaid furniture and musical instruments. The British Museum and the V&A have expressed concern that a total ban might prevent them adding to their collections or inhibit borrowing of such items for exhibitions.

An Impact Assessment to accompany this consultation document sets out the political and economic case for banning the sale of ivory in the UK. It identifies the nature of the benefits and costs and the sectors and groups affected, and the challenges and uncertainties in estimating impacts.

The consultation will help DEFRA better understand the type and scale of these effects and will inform an updated Impact Assessment. The proposed changes will affect all businesses (estimated at around 5,000 UK) and individuals buying and selling ivory (including import, export or re-export).

The impact is likely to cover the following major elements: 

  • All businesses that sell or may be expected to sell ivory, would need to familiarise themselves with any changes to regulations. This would represent a one off cost.
  • Antique dealers and any other businesses that hold residual stocks of items containing ivory at the point at which these new measures come into effect would no longer be able to sell these items unless they qualify for an exemption. This loss of inventory would be a one off cost for these businesses. There might also be an annual ongoing cost from no longer being able to sell and profit from these items. 
  • Auction houses that sell ivory items might lose commission revenue. This would be an annual on-going cost.
  • Individuals who own or inherit items containing ivory will not be able to sell these items unless they qualify for an exemption. This could represent a one off cost. 

Arguments have been put to DEFRA that in the event of a complete ban, those holding ivory that would have been saleable before any ban should be financially compensated.  Meanwhile, there may be some scope for advance tax planning. In the above circumstances where an item ceased to have value, a recent meeting of HMRC’s SAV Chattels Fiscal Forum attended by a representative from Lyon & Turnbull, discussed the possibilities of CGT claims arising out of items becoming of negligible value where the taxpayer is deemed to have disposed of and immediately re-acquired the asset at its market value (nil.) thus enabling a claim to loss relief.  HMRC considers ‘negligible’ to mean considerably less than 5% of the original cost.  

Valuation issues might also arise in the context of IHT valuations. DEFRA’s Impact Assessment suggests  “Where private owners or inheritors of ivory objects can no longer realise a financial market value, those individuals would have an incentive to dispose of or donate such items, particularly if rare (e.g. to local churches or museums), which could bring a benefit in terms of increased public access.” 

The Environment Secretary has made his position clear. Speaking at the launch of the consultation, Michael Gove said “Ivory should never be seen as a commodity for financial gain or a status symbol – so we want to ban its sale.”  It remains to be seen if the consultation will produce any flexibility.  Meanwhile, one category of ivory, mammoth ivory, is not affected where It has been pointed out that the mammoth as an extinct species is not endangered and therefore not covered by CITES or the proposed restrictions. If the Environment Secretary sticks to his guns, then it looks as though the trade in ivory may too join the ranks of extinct species.

View the Consultation