What does section 676AK of the Corporation Tax Act 2010 do?

Section 676AK prevents a company that has undergone a change in ownership from carrying forward UK property business losses that arose on or after 1 April 2017 but before the ownership change, and setting them against affected profits of any accounting period ending after that change. This ring-fences pre-change losses from post-acquisition exploitation.

What is a relevant UK property business loss under section 676AK?

A relevant UK property business loss is any loss made in a UK property business during an accounting period that began on or after 1 April 2017 and before the date the change in ownership occurred. Losses from accounting periods beginning before 1 April 2017 are not caught by this particular restriction, although other anti-avoidance provisions may still apply.

How does section 676AK limit carry-forward relief for UK property business losses?

Section 676AK limits relief in two ways. First, carry-forward relief for a relevant loss can only be applied to each notional accounting period on a standalone basis, preventing aggregation. Second, a relevant loss cannot be deducted from affected profits of any accounting period ending after the change in ownership, blocking the usual carry-forward and cessation relief routes.

Can new owners use pre-change UK property business losses to reduce post-acquisition profits?

No. Section 676AK ensures that pre-change UK property business losses arising on or after 1 April 2017 are ring-fenced. New owners cannot carry those losses forward and set them against affected profits that arise after the acquisition. This prevents exploitation of pre-existing losses to shelter post-acquisition tax liabilities.

Corporation Tax Act 2010 section 676AK

Restriction on use of post-1 April 2017 UK property business losses

Section 676AK restricts the ability of a company that has undergone a change in ownership to use UK property business losses arising before that change against certain profits after the change.

Applies to UK property business losses arising in accounting periods beginning on or after 1 April 2017 but before the date ownership changed.
Where a loss qualifies, relief can only be claimed against each notional accounting period on a standalone basis — you cannot aggregate periods.
These pre-change losses cannot be carried forward and set against "affected profits" of any accounting period ending after the change in ownership.
The restriction targets the same loss relief provisions that normally allow UK property business losses to be carried forward or used when a property business ceases.

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