Business Premises Renovation Allowances schemes (Spotlight 21)
Published 4 November 2013
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Business Premises Renovation Allowances (BPRA) is intended to support the regeneration of deprived regions of the UK.
Support is given by allowing business investors to claim a tax allowance for 100% of the amount they invest when converting or renovating empty business premises.
HM Revenue and Customs (HMRC) is aware of a number of tax avoidance schemes which aim to exploit BPRA. HMRC enquiries indicate that almost all of these schemes are seriously flawed and they will investigate anyone using them.
The disclosed BPRA schemes typically include one or more of the following or similar features:
- claims for costs other than the actual direct capital costs of renovating or converting an empty building in a deprived area, which qualify under the BPRA rules
- limited-recourse, often circular loans
- expenditure contractually incurred when the building is occupied and in use
- expenditure contractually incurred when the building is only recently vacated
- expenditure contractually incurred when when some of the agreed works may not start for several years, if at all
The majority of people who claim BPRA are making a valuable investment which will help to revive areas of the UK which have suffered particular economic hardship. They claim the correct amount of tax relief on their investment which Parliament intends them to have.
Despite the attempts to avoid tax and exploit BPRA, the government wishes to preserve the integrity of the relief without making the rules more complex and difficult to apply.
HMRC has more guidance on BPRA available.