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HMRC internal manual

Bank Levy Manual

From
HM Revenue & Customs
Updated
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Chargeable equity and liabilities: relevant foreign banks: attribution of chargeable equity and liabilities to a branch: determining the chargeable equity and liabilities of a branch

Determining the chargeable equity and liabilities of a UK branch follows a number of steps that are set out in paragraph 24 of Schedule 19.

This step by step process is necessary as it is important that the attributed chargeable equity and liabilities reflect only the true economic risk that the branch poses to the UK economy. Some UK branches may for example prepare a balance sheet but this will not provide the chargeable equity and liabilities for the bank levy because:

  • the UK branch balance sheet may only contain items that are booked to the branch on accounting principles rather that reflecting the true economic activities of the branch, and
  • the UK branch balance sheet will not provide the true funding profile of the business. In reality the branch is not separate from the foreign bank and in a time of need the UK branch would, as a matter of course, be able to draw on the funding that exists in the overall entity. Therefore the true funding profile and liabilities of the UK branch will reflect the overall funding profile and liabilities of the entity of which it forms a part.

Therefore the UK branch equity and liabilities for the purpose of the bank levy will need to reflect the genuine economic activities of the UK branch and be based upon the equity and liabilities and funding profile of the foreign bank (of which the UK branch is a part) rather than on any UK branch balance sheet that is available or that could be drawn up.