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Corporation Tax Act 2010

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[F1357DCThe mandatory streaming conditionsU.K.

This section has no associated Explanatory Notes

(1)Mandatory streaming condition A is met in relation to a trade of a company for an accounting period if—

(a)any amount brought into account as a credit in calculating the profits of the trade for the accounting period is not fully recognised as revenue for the accounting period, and

(b)the amount, or the aggregate of any such amounts, is substantial.

(2)An amount is a “substantial” amount for the purposes of this section if it is greater than—

(a)£2,000,000, or

(b)20% of the total gross income of the trade for the accounting period,

whichever is the lower.

(3)But an amount is not a substantial amount for the purposes of this section if it does not exceed £50,000.

(4)The reference in subsection (1)(a) to an amount brought into account as a credit includes a reference to any amount brought into account by virtue of section 147 of TIOPA 2010 (basic transfer-pricing rule).

(5)Mandatory streaming condition B is met in relation to a trade of a company for an accounting period if the total gross income of the trade for the accounting period includes—

(a)relevant IP income, and

(b)a substantial amount of licensing income that is not relevant IP income.

(6)In subsection (5) “licensing income” means income consisting of any licence fee, royalty or other payment which the company has received under an agreement granting another person any right in respect of any intellectual property held by the company.

Intellectual property” has the meaning given by section 712(3) of CTA 2009.

(7)Mandatory streaming condition C is met in relation to a trade of a company for an accounting period if the total gross income of the trade for the accounting period includes—

(a)income that is not relevant IP income, and

(b)a substantial amount of relevant Head 2 income.

(8)Income is “relevant Head 2 income” for the purposes of subsection (7) if—

(a)it is relevant IP income received under an agreement falling within subsection (6) of [F2section 357BH] , and

(b)every qualifying IP right—

(i)in respect of which a right within paragraph (a) of that subsection is granted by the agreement, or

(ii)which is granted in respect of an invention in respect of which a right within paragraph (b) of that subsection is granted by the agreement,

is a right in respect of which the company holds an exclusive licence.

(9)In a case where—

(a)relevant IP income is received under an agreement falling within [F3section 357BH(6)] , but

(b)the condition in paragraph (b) of subsection (8) above is not met,

so much of the relevant IP income as on a just and reasonable apportionment is attributable to any qualifying IP right falling within that paragraph is relevant Head 2 income for the purposes of subsection (7).]

Textual Amendments

F1Pt. 8A inserted (with effect in accordance with Sch. 2 paras. 7, 8 of the amending Act) by Finance Act 2012 (c. 14), Sch. 2 para. 1(1)

F2Words in s. 357DC(8)(a) substituted (15.9.2016) by Finance Act 2016 (c. 24), Sch. 9 para. 14(2)

F3Words in s. 357DC(9)(a) substituted (15.9.2016) by Finance Act 2016 (c. 24), Sch. 9 para. 14(3)

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