HMRC had concerns on planning that enhanced the amount of BPRA relief. The good news is that BPRA will continue until 2017. Also from next April, the quarantine period to avoid clawback on recovery of value will reduce from seven to five years.
On the other hand, additional conditions will be imposed on expenditure incurred from April next year. Only expenditure on the actual cost of construction and building work, certain specified activities (e.g. architectural and surveying services) and additional associated but unspecified activities (such as project management services) qualify for relief, up to a limit of 5 per cent of the actual costs.
Some types of BPRA schemes will no longer be effective and we expect HMRC will continue to challenge past schemes that they believe artificially enhanced participants’ claims for tax relief.
However the clarity as to what HMRC regard as acceptable tax planning using BPRA should result in it continuing as a popular tax planning opportunity.