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HMRC internal manual

Bank Levy Manual

Collection and management: payment through the Corporation Tax system: company tax returns used for bank levy due from a group

Paragraph 50 of Schedule 19

Where the bank levy is charged on a relevant group, one group entity will be the ‘responsible member’ for the whole group. See BKLM441000 for details of the process for selecting the responsible member.

The bank levy will therefore be included on the company tax return form. Box (K) to the supplementary return page CT600B allows the responsible member to report the bank levy.

The amount of bank levy will be included in the total carried forward from the supplementary page to Box 81 (Tax payable under S747 ICTA 1988) on the main CT600 company tax reform form.

The bank levy is treated by the responsible member as if it were an amount of Corporation Tax chargeable on the responsible member for the accounting period:

  • that starts and ends at the same time as the chargeable period (chargeable period is defined at BKLM152000),

or, where the responsible member does not have an accounting period that starts and ends at the same time as the chargeable period,

  • the accounting period during which the chargeable period ends.

Where the responsible member’s accounting period does not start and finish at the same time as the chargeable period, it will have more than one accounting period that overlaps the chargeable period. Where this is the case paragraph 50 of Schedule 19 ensures that a proportion of the bank levy is allocated to each accounting period that overlaps the chargeable period.

The relevant proportion of the bank levy is to be treated as if it were an amount of Corporation Tax for that other accounting period, or those other accounting periods.

Example

A banking group has a chargeable period starting on 1 January 2016 and ending on 31 December 2016. The bank levy due for this chargeable period is £100m.

The responsible member has regular 12 month accounting periods ending on 31 March.

The accounting period ending 31 March 2017 will be the accounting period under which the bank levy for chargeable period ending on 31 December 2016 is to be returned, as this is the accounting period in which the chargeable period ends.

Use this link to view the example image

The above diagram illustrates that part of the chargeable period falls into another accounting period (the AP ending 31 March 2016) of the responsible member; 3/12 (or 25%) of the chargeable period falls into accounting period ending 31 March 2016.

So 25% of the bank levy charge that would otherwise be returned in its accounting period ending on 31 March 2017 must instead be returned in the accounting period ending 31 March 2016.

So as the bank levy charge for chargeable period ending 31 December 2016 is £100m.

  • £25m (25% of the £100m) will be returned in AP ending 31 March 2016, and
  • £75m (75% of the £100m) will be returned in AP ending 31 March 2017.

Anti-avoidance provision

There is an anti-avoidance provision at Regulation 5B of SI1785/2011 (the Corporation Tax (Instalment Payments) (Amendment) Regulations 2011) to prevent a group from amending their accounting periods to create a position where they have no relevant member with an accounting period that both starts and ends on the same day as the chargeable period in order to obtain a tax advantage. See BKLM464000 for further details.