Business premises renovation scheme 'tax loophole'
A scheme to bring empty business premises back into use in deprived areas is being exploited for tax avoidance, the Treasury has said.
The Business Premises Renovation Allowance (BPRA) helps developers with the costs of renovating properties that have stood empty for more than a year.
But Her Majesty's Revenue and Customs (HMRC) says there is evidence it is being used for tax avoidance.
An investigation has been launched into anyone using the scheme.
Exchequer Secretary David Gauke said almost all of the projects using the scheme are "seriously flawed".
The BPRA provides 100% capital allowances for the capital costs of converting or renovating empty business property in certain disadvantaged areas of the UK.
Mr Gauke said the Treasury has alerted the government to a recent increase in Disclosure of Tax Avoidance Schemes disclosures involving BPRA, "which appear to contain features aimed at exploiting the relief in ways that Parliament had not intended".
"The government has, therefore, authorised HMRC to conduct a technical review of the BPRA legislation, with a view to making its policy purpose even clearer, so that the scheme may be made simpler and more certain in its application, at the same time reducing the risks of exploitation.
"HMRC will shortly be publishing this technical review, along with an associated Spotlight article to alert people to the fact that almost all of the disclosed BPRA schemes appear to be seriously flawed and that HMRC will investigate anyone using them," the minister said.
The review will form the basis of new legislation expected in 2014.
Mr Gauke said the government "remains committed" to the objectives of the allowance scheme will helps to "increase private investment, enterprise and employment in deprived communities".