The pattern has become all too familiar. First, just a couple of units close on the high street, casualties of undoubtedly the worst retail crunch of all time. As dust collects in the shop fronts for all to see, soon they are joined by another two closures. More follow. The precinct starts to take on the look of a ghost town and gradually the area slides in to the doldrums, putting off the area’s already cash-strapped shoppers even more.?Government rhetoric insists it is keen to do what it can to revitalise our town centres. But meaningful initiatives seem in rather short supply.? However, a little lateral thinking with regards to an under-used tax relief, and some pressure brought to bear on the authorities, might bring solutions. The Business Property Renovation Allowance (BPRA) exists to allow building owners to claim 100 per cent tax relief for expenditure relating to the conversion of disused commercial buildings, to bring them back in to commercial use.? So, for example, a top-rate tax payer (ie: paying 50 per cent tax) would save 50p tax for every ?1 of renovation expenditure.? Another plus is that where BPRA is used in connection with a real-estate business (the building owner rents the property out through a company structure, for example), they may also be off-set against an investor’s personal income by way of sideways loss relief.? There are a number of restrictions: the relief does not apply to the cost of acquisition or extension, only renovation; a “qualifying” building must be in a disadvantaged area (currently covers swathes of North and Central England, Scotland and Wales ? and all of Northern Ireland); it must have been disused for at least a year; it must have last been used for a trade, profession or vocation, or as offices ??but not as a dwelling (so retail units clearly apply); and must be being converted to one of these categories of use again.? The BPRA scheme was due to be brought to a close last year, but was extended for a further five years in 2011’s Budget.? Take-up to date has been surprisingly low however. At the time of the Budget, Treasury figures showed that in 2009-10 only 300 companies and unincorporated businesses claimed expenditure of around ?90m.? To date, in our experience, the relief has been used almost exclusively in the branded hotel sector. But there is so much more it could be used for ? and for the benefit of the wider business community.? The retail sector, in particular, could gain hugely from some smart thinking and application of BPRA reliefs.? The opportunity is significant. Were the government actively to promote the BPRA scheme, and were it to remove some of the current restrictions opening it up more widely, then this could really give our high street the boost it so desperately needs.? Huw Witty is a partner and real estate tax specialist at law firm Fladgate LLP.
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