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HMRC internal manual

Bank Levy Manual

Chargeable equity and liabilities: relevant entities and groups: foreign banking groups: GAAP differences: introduction

Paragraph 17(15) of Schedule 19

Paragraph 17(15) requires that Type C equity and liabilities are determined by reference to financial statements prepared under IAS or UK GAAP.

Where financial statements have been prepared using a local GAAP that differs from IAS and UK GAAP, adjustment will be required for significant differences that could otherwise distort the levy base.

The following sections consider some practical considerations, and detail some of the adjustments that, depending on the circumstances, may be required, as well as some areas where we consider it unlikely that adjustments will be necessary.

This guidance provides a high level overview of our understanding of certain GAAP differences that may be relevant to Type C equity and liabilities. Banks will however have to consider the extent to which adjustments may be required to their reported figures based upon their individual circumstances.

Where financial statements are prepared using local GAAP, and where there are significant differences between those local GAAP amounts and the amounts which would be reported under IAS or UK GAAP, adjustments for those differences will be expected.

No adjustment will generally be expected for the following:

  • GAAP differences relating to excluded liabilities, such as current tax, deferred tax, insurance liabilities, and defined benefit pension liabilities
  • GAAP differences which may result in a different classification between equity and long term liabilities, as all such amounts should remain within the levy base
  • small measurement differences arising on liabilities where an amortised cost basis of accounting is used which is broadly consistent with IAS/UK GAAP
  • small measurement differences arising on liabilities where a fair value basis of accounting is used which is broadly consistent with IAS/UK GAAP.

The main GAAP differences which may require adjustment are summarised as follows:

BKLM322325 Japanese GAAP
BKLM322330 Other local GAAPs