Corporation Tax Act 2010 section 357DB

Method of allocation

Section 357DB requires companies that have made a streaming election to use a consistent method for allocating deductions between income streams when calculating relevant IP profits, and sets out what happens when circumstances change.

• Once a company chooses a method for allocating deductions between IP and non-IP income streams, it must use the same method in every subsequent accounting period for which streaming applies.
• The consistency requirement applies regardless of whether streaming was adopted voluntarily by election or was mandated under the rules.
• If a change of circumstances makes the existing allocation method inappropriate, the company may either switch to a different method or elect not to apply streaming for that period.
• Choosing not to apply streaming for one period does not prevent the company from making a fresh streaming election for any later accounting period.