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HMRC internal manual

Bank Levy Manual

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Anti-avoidance: relevant arrangements that can be ignored when applying the anti-avoidance rule: background

Paragraph 47(6) of Schedule 19

The bank levy legislation seeks to encourage banks to adopt lower risk funding strategies. It is hoped that relevant groups and relevant entities will respond by shifting their ongoing funding profile towards lower risk, long term or excluded equity and liabilities.

It is not intended that the anti-avoidance rule will apply to prevent relevant groups and relevant entities that adopt these positive policies from benefiting from a reduced charge to the bank levy. The legislation therefore includes six exclusions, which prevent the anti-avoidance rules applying to the extent relevant arrangements have specified effects.

Where relevant arrangements have a number of effects, more than one exclusion may apply. To the extent an effect of relevant arrangements does not fall within an exclusion, and results in a reduced charge or assessment to the bank levy, the levy will be charged as if that effect did not apply - see BKLM640000.

Relevant arrangements are to be ignored for the purposes of the anti-avoidance rule, to the extent their effect is:

Paragraph 47(7) - to increase, on an ongoing basis, the excluded equity and liabilities of the relevant group or relevant entity - see BKLM641100,

Paragraph 47(8) - to increase, on an ongoing basis, the long term equity and liabilities of the relevant group or relevant entity - see BKLM641200,

Paragraph 47(9) - to reduce, on an ongoing basis, the short term liabilities of the relevant group or relevant entity, with no corresponding increase in the amount of funding from sources which is not excluded equity and liabilities or long term equity and liabilities - see BKLM641300,

Paragraph 47(10) - to reduce, on an ongoing basis, the long term equity and liabilities of the relevant group or relevant entity, with no corresponding increase in the amount of funding from sources which is not excluded equity and liabilities BKLM641400,

Paragraph 47(11) - to enter into net settlement agreements in the form prescribed by legislation - see BKLM641500, or

Paragraph 47(12) - to increase, on an ongoing basis, the amount of high quality liquid assets of the relevant group or relevant entity - see BKLM641600.