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Revenue probes regeneration tax schemes

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5th Apr 2013
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HMRC is investigating tax schemes targeting capital allowance reliefs available under government-backed initiatives to regenerate deprived areas.

According to The Times, the Revenue is concerned that regeneration projects worth up to £2bn are being used for artificial tax avoidance.

One of the schemes, set up by the coalition government to stimulate growth and incentivise development, is worth £450m and funded by Chancery Accounts and Tax. The project is backed by well-known investors including golfer Rory McIlroy, Wayne Rooney and Kenny Dalglish, but has been targeted for what HMRC sees as artificial levels of developer income.

In a continuing series of articles on tax avoidance, The Times reported that since the limited liability partnership was founded six years ago by former HMRC tax inspector Peter Nichols, it claims to have raised £750m for property schemes.

In addition to film schemes and enterprise investment schemes (EIS), Chancery markets property investment services taking advantage of the business premises renovation allowance (BPRA). This incentive gives 100% capital allowances relief on expenditure used to bring disused commercial properties back into business use. The Stanley Dock regeneration in LIverpool (pictured above) is one of the schemes it says it has backed.

The firm's website also explains that BPRAs, EIS, film schemes and its other services are not regulated by the Financial Services Authority.

HMRC said while unable to discuss individual cases, BPRA claims are “carefully considered in their own right”.

“If we think the amount of repayment claimed is excessive, then we will either completely withhold repayment, or repay less than claimed pending an enquiry," a spokesperson said.

“HMRC has an outstanding record for tackling tax avoidance. We act on disclosures made under the DOTAS rules, systematically challenging avoidance schemes.

“We win a clear majority of cases taken to the courts and we will continue to litigate avoidance on behalf of the vast majority of businesses and individuals who choose to play by the rules.”

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