Section 127A | No relief for tax-generated losses attributable to annual investment allowance ^F1

(1)This section applies if—

(a)in a tax year a person makes a loss in a UK property business or overseas property business (whether carried on alone or in partnership),

(b)the loss has a capital allowances connection (see section 123(2)), and

(c)the loss arises directly or indirectly in consequence of, or otherwise in connection with, relevant tax avoidance arrangements.

(2)No property loss relief against general income may be given to the person for so much of the applicable amount of the loss as is attributable to an annual investment allowance.

(3)For the purposes of subsection (2), the applicable amount of the loss is to be treated as attributable to capital allowances before anything else and to an annual investment allowance before any other capital allowance.

(4)In subsection (1) “relevant tax avoidance arrangements” means arrangements—

(a)to which the person is a party, and

(b)the main purpose, or one of the main purposes, of which is being in a position to make use of an annual investment allowance in the obtaining of a reduction in tax liability by means of property loss relief against general income.

(5)In subsection (4) “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).

(6)In this section “the applicable amount of the loss” has the meaning given by section 122.