BPRA & EZ Schemes

I’ve invested in a property renovation scheme and I’m worried about what is happening, not only to the tax relief claim but also the asset itself.

HMRC’s ability to issue APN’s to demand tax in dispute on BPRA schemes created an urgency to resolve the final tax position for many investors. These schemes have been under intermittent enquiry for a decade but the ability for HMRC to demand money in dispute (APN) altered the party which has the incentive to bring matters to a conclusion.

Having recovered the “tax in dispute”, HMRC has no need to progress an enquiry quickly. They can and do take their time and select the best cases to prove their point. Unfortunately, HMRC has multiple objectives, including principles that they have been attempting to resolve in their favour for many years.  This increases the time required to reach resolution and recovery of tax paid.

There is then the additional issue of the original scheme providers and their motives in defending the structures. In our experience, those scheme providers still extant demand unquestioning acceptance of their preferred approach; are reluctant to share information; are able to charge fees without limit or transparency and are conflicted by having more than one scheme under enquiry. Independent advice that is informed and experie in this area is necessary.

WTT Consulting’s approach is to deploy its extensive knowledge of the structures and providers’ modus operandi, along with analysis of HMRC’s position and objectives, to give clients unbiased and expert advice on how to arrive at a settlement. Having a core of existing clients who are investors in these (and related) schemes, WTT has a database of scheme specific materials and analysis which offers us an unparalleled knowledge of the transactions and the market as a whole, allowing us to advise clients more fully. 

Litigation of these schemes promises to be a long and expensive process with significant financial risks and the prospect of a binary “win or lose” result. Whilst we consider it bizarre that HMRC is litigating a statutory relief intended by Parliament to promote investment, there is no doubting this is exactly the intent. The options for investors are to settle via a negotiation or await and pay for a long legal process.

HMRC has shown willing (and is indeed obliged) to discuss individual settlement. Such arrangements have the advantage of being confidential and as such do not create a “legitimate expectation” that all investors will be treated equally. Such arrangements also reduce the number of outstanding disputes which is a key metric used by Parliament in assessing HMRC’s performance.

Based on the above WTT’s preferred method is to bring together groups of investors involved in the same or similar schemes. This has the advantage of concentrating materials, improving technical analysis, preventing unfairness arising out of HMRC’s disjointed approach and sharing of costs. The strength derived from such groups is important as a support network for investors, many of whom become very worried about having to defend what they were sold as a legitimate investment. For some the prospect of public exposure is an additional concern. A negotiated settlement is absolutely confidential.

Aside from the tax in dispute, investors must consider the asset, which in most cases is performing well. Realising the value out of this is imperative and so it is important for all investors to maintain an understanding of the valuation and to become involved in important decisions that affect its future. WTT engages valuers and then makes suitable plans to protect the asset from influence by those who do not benefit directly. 

It is entirely possible that WTT is already working on your investment in this area so, for further information please do not hesitate to contact the team.

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Just got the WTT newsletter thank goodness. Common sense and rational thinking has got me back on the level.

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