Section 357BN | Small claims treatment ^F1F2

(1)This section applies where—^F1F2

(a)a company carries on only one trade during an accounting period,^F1F2

(b)section 357BF applies for the purposes of determining the relevant IP profits of the trade for the accounting period, and^F1F2

(c)the qualifying residual profit of the trade for the accounting period does not exceed whichever is the greater of—^F1F2

(i)£1,000,000, and^F1F2

(ii)the relevant maximum for the accounting period.^F1F2

(2)The company may make any of the following elections for the accounting period—^F1F2

(a)a notional royalty election (see section 357BNA),^F1F2

(b)a small claims figure election (see section 357BNB), and^F1F2

(c)a global streaming election (see section 357BNC).^F1F2

This is subject to subsections (3) and (4).

(3)The company may not make a notional royalty election, a small claims figure election or a global streaming election for the accounting period if—^F1F2

(a)the qualifying residual profit of the trade for the accounting period exceeds £1,000,000,^F1F2

(b)section 357BF applied for the purposes of determining the relevant IP profits of the trade for any previous accounting period beginning within the relevant 4-year period, and^F1F2

(c)the company did not make a notional royalty election, a small claims figure election or (as the case may be) a global streaming election for that previous accounting period.^F1F2

(4)The company may not make a small claims figure election for the accounting period if—^F1F2

(a)the qualifying residual profit of the trade for the accounting period exceeds £1,000,000,^F1F2

(b)section 357C or 357DA applied for the purposes of determining the relevant IP profits of the trade for any previous accounting period beginning within the relevant 4-year period, and^F1F2

(c)the company did not make an election under section 357CL for small claims treatment for that previous accounting period.^F1F2

(5)In subsections (3) and (4) “the relevant 4-year period” means the period of 4 years ending with the beginning of the accounting period mentioned in subsection (1)(a).^F1F2

(6)For the purposes of this section, the “qualifying residual profit” of a trade of a company for an accounting period is the amount which (assuming the company did not make an election under this section) would be equal to the aggregate of the relevant IP income sub-streams established at Step 2 in section 357BF(2) in determining the relevant IP profits of the trade for the accounting period, following the deductions from those sub-streams required by Step 4 in section 357BF(2) (ignoring the amount of any sub-stream which is not greater than nil following those deductions).^F1F2

(7)For the purposes of this section, the “relevant maximum” for an accounting period of a company is—^F1F2

(a)in a case where the company has no associated company in the accounting period, £3,000,000;^F1F2F3

(b)in a case where one or more companies are related 51% group companies of the company in the accounting period, the amount given by the formula—^F1F2F4F5

(8)For an accounting period of less than 12 months, the relevant maximum is proportionally reduced.^F1F2

(9)The rules in Part 3A (see sections 18E to 18J) which apply for determining whether a company is another company's associated company in an accounting period for the purposes of section 18D apply for the purposes of this section.^F1F2F6