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HMRC internal manual

Bank Levy Manual

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HM Revenue & Customs
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Double Taxation Relief: France: which balance sheet?

The bank levy is based upon liabilities that arise in the balance sheet for the chargeable period in question. This means that the bank levy will arise on a current year basis, with for example the balance sheet for 31 December 2020 giving rise to the bank levy for the chargeable period ending 31 December 2020.

However, the French bank levy is based upon the balance sheet of the preceding period. Using the same dates as above, this means that the balance sheet for 31 December 2020 will be used to compute the liability arising for the chargeable period ending 31 December 2021.

This raises the question of which balance sheet should be used in order to determine the credit arising under Regulation 4? Would it be the balance sheet for 2020 or 2021?

The answer is straightforward. In order to qualify for relief an equivalent foreign levy must (amongst other things - see BKLM730000) arise from the balance sheet. For there to be double taxation this means that the foreign levy must arise in respect of the same balance sheet that gave rise to the bank levy charge.

So in our example the bank levy for 31 December 2020 (which arises from the balance sheet at 31 December 2020) will be reduced by the credit arising from the French bank levy calculated by reference to the same balance sheet at 31 December 2020.

Therefore when looking at steps 1 and 2 (see BKLM740150) to determine the assets and UK assets, and step 3 to determine the equivalent foreign levy, the balance sheets for the same period as the chargeable period must be used.