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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: relevant non-banking groups: joint ventures: elimination of double charges

Paragraph 44 of Schedule 19

Where the JV is a parent entity of a banking group (under paragraph 4 of Schedule 19) there may be a need to eliminate double counting of its liabilities when charging the bank levy. The situation arises as the bank levy will be charged on the JV’s own liabilities and then again potentially on the venturer’s share of the JV’s liabilities that will be contained within its financial statements.

Double counting can also arise if the JV is a relevant entity (a stand alone bank under paragraph 5 of Schedule 19). Here, these liabilities will be charged firstly in respect of the JV as a stand alone entity and then again if the venturer includes its share of the JV’s liabilities in its own consolidated financial statements.

To prevent such double counting, provision is made in paragraph 44, where two conditions are both met, to allow certain liabilities of a JV that is either a stand alone bank or a parent entity of a banking group to be left out of the bank levy charge. In such cases, the bank levy will instead be charged only on the venturer’s share of the liabilities in the JV.

The two conditions are set out in paragraphs 44(4) - (6).

Condition A

Condition A applies to two scenarios:

  • Where an entity ‘V’ has an interest in a JV and V is itself either a relevant parent (under paragraph 4 of Schedule 19) or a relevant entity (a stand alone bank under paragraph 5 of Schedule 19), or
  • Where there is another entity ‘A’ which is a relevant parent (under paragraph 4); and V is a member of A’s group.

The first scenario covers the situation where the liabilities may be charged to the bank levy on both the JV and V.

The second situation covers the situation where V’s results are consolidated into its parent’s financial statements. In this situation the liabilities may be charged on the JV and again on entity A.

Condition B

Condition B arises where the circumstances described in Condition A result in the JV liabilities being taken into account when determining the chargeable equity and liabilities of V or A.

Where both conditions A and B are met the bank levy will be charged only on the venturer’s share of the liabilities in the joint venture.