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HMRC internal manual

Bank Levy Manual

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HM Revenue & Customs
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Chargeable equity and liabilities: relevant entities and groups: foreign banking groups: Type A equity and liabilities

Paragraph 17(3) of Schedule 19

The starting point for determining the Type A equity and liabilities are the chargeable equity and liabilities shown in the relevant UK sub-group’s consolidated financial statements which should be prepared under either IAS or UK GAAP.

A UK sub-group is a group of entities that:

  • constitute a group under the provisions of IAS or UK GAAP
  • have a UK resident parent entity, and
  • are all members of the same foreign banking group.

It becomes a ‘relevant’ UK sub-group where:

  • consolidated financial statements are prepared under either IAS or UK GAAP for the chargeable period, and
  • the members of the group are not members of a larger UK sub-group for which consolidated financial statements are prepared.

To determine the chargeable equity and liabilities that make up the Type A equity and liabilities, the following steps should be taken:

  1. from the equity and liability figures shown in the relevant UK sub-group’s consolidated financial statements firstly ignore any excluded equity and liabilities (see BKLM330000)
  2. make any intra-group adjustments or eliminations
  3. adjust for relevant legally enforceable netting (see BKLM350000)
  4. adjust for joint ventures (see BKLM323500), and
  5. finally, reduce the remaining equity and liabilities (but not below nil) by the amount of the relevant UK sub-group’s relevant high quality liquid assets (see BKLM360000).

To avoid double relief, the deduction for high quality liquid assets should be restricted by any amounts which have already been excluded through adjustments for netting.

Note: High quality liquid assets should be set off against equity and long term liabilities before short term liabilities.

Type A equity and liabilities may be ignored if they meet the de minimis conditions - see BKLM380000.