Anti-avoidance: relevant arrangements that can be ignored when applying the anti-avoidance rule: reductions of long term liabilities
Paragraph 47(10) of Schedule 19
The anti-avoidance rule does not apply to relevant arrangements, so far as their effect is to reduce, on an ongoing basis, long term equity and liabilities.
This exception applies where the relevant group or relevant entity reduces its funding from sources which are long term liabilities, and either the funding is not replaced, or it is replaced by funding from sources which are excluded equity and liabilities. It does not apply where funding from sources which are long term liabilities is replaced with funding from sources not meeting these criteria.
Whether a reduction is on an ongoing basis will be considered in the context of the bank or group’s overall funding profile over a period of time. ‘Window dressing’ to achieve a short term effect around the balance sheet date will not generally be considered to be on an ongoing basis.
Other effects of relevant arrangements are not ignored, unless an exception applies - see BKLM641000.