BKLM315500 - Chargeable assets and liabilities: determining the UK-based equity and liabilities of UK sub-groups

Paragraphs 15J to 15L of Schedule 19

The calculation of the UK-based equity and liabilities of a UK sub-group (see BKLM315130) depends on whether the sub-group includes a member that is a non-UK resident entity or a designated FPE entity (see BKLM315200); or if there is an entity-by-entity election for the sub-group (see below).

Where all of the members of a UK sub-group are UK residents, and there are no designated FPE entities and an entity-by-entity election (see below) has not been made:

  • take the amount of equity and liabilities recognised in the sub-group’s consolidated financial statements as at the end of the chargeable period; and
  • adjust that amount in accordance with paragraph 15N (see BKLM315600).

Where an entity-by-entity election (see below) has not been made for a UK sub-group, but the sub-group has at least one member which is non-UK resident or a designated FPE entity, the UK based equity and liabilities is the total of:

  • the amount of equity and liabilities that would be recognised if consolidated financial statements had been prepared for the residual UK sub-group and adjusted in accordance with paragraph 15N; and
  • the equity and liabilities of each designated FPE entity in the sub-group, adjusted in accordance with step 5 of paragraph 15Z1 (see BKLM315700).

“Residual UK sub-group” means the entities in the group that are UK resident but not designated FPE entities.

Entity-by-entity election

Where a group is within the charge to Bank Levy the group’s responsible member (see BKLM442000) may make an entity-by-entity election in relation to a UK sub-group.

Where an entity-by-entity election has been made the amount of the UK-based equity and liabilities of that sub-group as at the end of the chargeable period is the total of:

  • the amount of equity and liabilities of each UK resident entity member of that sub-group, other than a member that is a designated FPE entity. In calculating the amount of equity and liabilities these are determined in accordance with paragraph 15G (see BKLM315300) to reflect amounts recognised in each entity’s financial statements under IAS, or the amounts that would have been recognised had IAS been followed, and adjusted in accordance with paragraph 15N (the adjusted equity and liabilities); and
  • the equity and liabilities of each designed FPE entity adjusted in accordance with Step 5 of paragraph 15Z1.

An entity-by-entity election should be made in writing during the chargeable period and be sent to the relevant sub-group’s Customer Compliance Manager (copying in the relevant Bank Levy tax specialist for the sub-group, if there is one). It should list the names of each UK resident entity in that sub-group and should provide the chargeable period from which the election is to have effect.

An entity-by-entity election has effect for the chargeable period it is made and all subsequent periods unless it is revoked. An election may be revoked at any time (including the time between when it was made and the filing date for the relevant return) by the group’s responsible member (see BKLM500000).

An entity-by-entity election has no effect if the purpose, or one of the main purposes, of making the election is to avoid or reduce a charge or assessment to the Bank Levy.