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HMRC internal manual

Bank Levy Manual

Chargeable equity and liabilities: relevant entities and groups: foreign banking groups: Type C equity and liabilities

Paragraph 17(11) of Schedule 19

Type C equity and liabilities are those equity and liabilities that relate to any non-UK resident entity which is not a member of a relevant UK sub-group (that is the UK sub-group parent does not prepare consolidated accounts including that entity’s results) but which is a member a UK sub-group, and is also a member of the foreign banking group.

The starting point for determining the Type C equity and liabilities are the non-UK resident entity’s financial statements which should be prepared under either IAS or UK GAAP.

Where those financial statements have been prepared using a local GAAP that differs from IAS and UK GAAP, adjustments will be required for significant differences that could otherwise distort the levy base. See Type C Equity and Liabilities: GAAP differences at BKLM322310.

To determine the chargeable equity and liabilities that make up the Type C equity and liabilities, the following steps are taken:

  1. ignore excluded equity and liabilities (see BKLM330000) within the total equity and liability figures taken from the relevant non-UK resident entity’s financial statements (adjusted as necessary for any GAAP differences)
  2. then 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 entity’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 C equity and liabilities may be ignored if they meet the de minimis conditions - see BKLM380000.