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Finance (No. 3) Bill


Finance (No. 3) Bill
Schedule 19 — The bank levy
Part 5 — Supplementary provision

320

 

37    (1)  

Financial services compensation scheme liabilities are excluded.

      (2)  

“Financial services compensation scheme liabilities” means liabilities

representing—

(a)   

levies payable by virtue of section 213(2)(b) of FISMA 2000, or

(b)   

levies payable for purposes comparable with those mentioned in

5

section 213(2)(b) of that Act in relation to a scheme which—

(i)   

operates outside the United Kingdom, and

(ii)   

is comparable to the Financial Services Compensation

Scheme under section 213 of that Act.

38    (1)  

Liabilities representing clients’ money held by an authorised person are

10

excluded.

      (2)  

“Authorised person” means an entity which—

(a)   

is an authorised person for the purposes of FISMA 2000 (see section

31 of that Act), or

(b)   

would be required to be such an authorised person if it were a UK

15

resident entity which carried on its activities in the United Kingdom.

      (3)  

“Clients’ money”—

(a)   

in relation to an authorised person within sub-paragraph (2)(a), has

the meaning given by section 139(1) of FISMA 2000 (rules relating to

handling of money), and

20

(b)   

in relation to an authorised person within sub-paragraph (2)(b),

means any money held by the person outside the United Kingdom

where the holding of that money is subject to rules comparable with

rules made under section 139 of that Act,

           

but does not include a deposit within the meaning of article 5(2) of the

25

Financial Services and Markets Act 2000 (Regulated Activities) Order 2001

(S.I. 2001/544) ignoring the exclusions in articles 6 to 9AB.

39    (1)  

Currency liabilities are excluded.

      (2)  

“Currency liabilities” means liabilities of an entity or a group of entities

representing notes issued by the entity or a member of the group as

30

currency.

Part 5

Supplementary provision

Chargeable periods: entities which do not prepare financial statements

40    (1)  

This paragraph applies where an entity does not prepare financial

35

statements (consolidated or otherwise) for a period (“the relevant period”).

      (2)  

If the relevant period is 12 months or less, this Schedule (apart from this

paragraph) applies as if that period were a period of account of the entity.

      (3)  

If the relevant period is more than 12 months, this Schedule (apart from this

paragraph) applies as if each period to which sub-paragraph (4) applies

40

were a period of account of the entity.

      (4)  

This sub-paragraph applies to a period if—

(a)   

it is the first period of 12 months falling within the relevant period, or

 
 

Finance (No. 3) Bill
Schedule 19 — The bank levy
Part 5 — Supplementary provision

321

 

(b)   

it begins immediately after the end of the period mentioned in

paragraph (a) and ends at the end of the relevant period.

      (5)  

Sub-paragraph (6) applies if, at the end of a period of 36 months beginning

with a relevant date, an entity has not prepared financial statements for a

period which begins with that date.

5

      (6)  

The entity is to be treated for the purposes of this paragraph as not having

prepared financial statements for that period or, if that period exceeds 24

months, for the first 24 months of that period.

      (7)  

“Relevant date” means—

(a)   

1 January 2011,

10

(b)   

the first day after a period, ending on or after that date, for which the

entity has prepared financial statements, or

(c)   

the first day after a period for which the company is treated under

sub-paragraph (6) as not having prepared financial statements.

Financial statements etc

15

41    (1)  

This paragraph applies for the purposes of this Schedule.

      (2)  

References to consolidated financial statements for a period include

references to a consolidated balance sheet (or consolidated statement of

financial position) as at the last day of the period.

      (3)  

References to financial statements for a period include references to a

20

balance sheet (or statement of financial position) as at the last day of the

period.

      (4)  

References to amounts recognised in consolidated financial statements or

financial statements include references to an amount comprised in an

amount so recognised.

25

      (5)  

Sub-paragraph (6) applies if an amount for the chargeable period, or as at the

last day of the chargeable period, is so recognised in a currency other than

sterling.

      (6)  

The amount is to be translated into its sterling equivalent by reference to the

spot rate of exchange for the last day of the chargeable period.

30

      (7)  

If consolidated financial statements or financial statements for the

chargeable period are not prepared in a way which complies with the

relevant accounting framework under which the statements are prepared,

the statements are to be adjusted as necessary to ensure that they comply.

      (8)  

In sub-paragraph (7) “relevant accounting framework” means—

35

(a)   

international accounting standards,

(b)   

US GAAP, or

(c)   

UK GAAP.

      (9)  

In relation to the preparation of consolidated financial statements or

financial statements under UK GAAP, Financial Reporting Standard 23 and

40

Financial Reporting Standard 26 are to be treated as if they were mandatory

for all entities.

     (10)  

Accordingly, if any statements are prepared under UK GAAP without one

or both of those Standards being applied, the statements are to be treated as

 
 

Finance (No. 3) Bill
Schedule 19 — The bank levy
Part 5 — Supplementary provision

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not complying with UK GAAP and adjusted under sub-paragraph (7)

accordingly.

Joint ventures

42    (1)  

This paragraph applies if—

(a)   

the relevant group is a foreign banking group or a relevant non-

5

banking group,

(b)   

a member of the relevant group has an interest (“the relevant

interest”) in a joint venture for the purposes of those provisions of the

applicable accounting standards which relate to joint ventures,

(c)   

the amounts recognised in the relevant consolidated financial

10

statements include amounts representing the liabilities (“the JV

liabilities”) of the joint venture so far as determined by the relevant

interest,

(d)   

the joint venture is a UK resident entity or, if the relevant group is a

relevant non-banking group, a UK resident bank, and

15

(e)   

none of the liabilities of a relevant UK sub-group, a relevant UK

banking sub-group or any entity for the purposes of (as the case may

be) paragraph 17(6)(a) or (12)(a), 19(6)(a) or (12)(a) or 27(2)(a) include

the JV liabilities.

      (2)  

For the purpose of determining the chargeable equity and liabilities of the

20

relevant group the joint venture is to be treated as if it were (as the case may

be) a UK resident entity covered by paragraph 17(10) or a UK resident bank

covered by paragraph 19(10)—

(a)   

the liabilities of which consist of the JV liabilities, and

(b)   

the assets of which consist of the assets of the joint venture so far as

25

determined by the relevant interest.

      (3)  

In this paragraph references to the amounts recognised in the relevant

consolidated financial statements are to—

(a)   

the amounts recognised in the relevant group’s consolidated

financial statements for the chargeable period as prepared under the

30

applicable accounting standards, or

(b)   

if no such financial statements are prepared, the amounts which

would have been so recognised had consolidated financial

statements for the relevant group been prepared for the chargeable

period under international accounting standards.

35

      (4)  

“The applicable accounting standards” means—

(a)   

international accounting standards, or

(b)   

US GAAP if the members of the relevant group are determined

under paragraph 4(7).

43    (1)  

This paragraph applies for the purpose of determining the chargeable equity

40

and liabilities of the relevant group or the relevant entity if, as at the end of

the chargeable period—

(a)   

the parent entity or the relevant entity is a joint venture for the

purposes of a JV standard, and

(b)   

the liabilities of the parent entity or the relevant entity include

45

liabilities (“the JV liabilities”) which are subject to a double charge.

      (2)  

The JV liabilities are to be left out for the purpose of determining the

chargeable equity and liabilities.

 
 

Finance (No. 3) Bill
Schedule 19 — The bank levy
Part 5 — Supplementary provision

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      (3)  

In sub-paragraph (1)(b) the reference to the liabilities of the parent entity

includes any liabilities which, in the absence of this paragraph, would form

part of the chargeable equity and liabilities of the relevant group.

      (4)  

The JV liabilities are subject to a double charge if conditions A and B are met.

      (5)  

Condition A is that an entity (“V”) which has an interest in the joint venture

5

for the purposes of the JV standard—

(a)   

is an entity in relation to which paragraph 4(1) or 5(1) applies as at

the end of the chargeable period (or in relation to which paragraph

4(1) or 5(1) would apply if V had a period of account ending at the

same time as the chargeable period), or

10

(b)   

falls within sub-paragraph (6).

      (6)  

V falls within this sub-paragraph if—

(a)   

there is another entity (“A”) in relation to which paragraph 4(1)

applies as at the end of the chargeable period (or in relation to which

paragraph 4(1) would apply if A had a period of account ending at

15

the same time as the chargeable period), and

(b)   

V is (or would be) a member of the relevant group of which A is (or

would be) the parent entity.

      (7)  

Condition B is that—

(a)   

in the circumstances mentioned in sub-paragraph (5)(a) or sub-

20

paragraph (5)(b) (when read with sub-paragraph (6)), the bank levy

is charged (or would be charged), and

(b)   

in determining the amount of the bank levy, the JV liabilities are (or

would be) liabilities for the purposes of paragraph 15(2)(a), 17(6)(a)

or (12)(a), 19(6)(a) or (12)(a), 21(2)(a) or 27(2)(a) by virtue of V having

25

an interest in the joint venture.

      (8)  

“JV standard” means those provisions of international accounting standards

or UK GAAP which relate to joint ventures.

Residence

44         

For the purposes of this Schedule—

30

(a)   

the territory in which a company is resident is to be determined as

for corporation tax purposes, and

(b)   

the territory in which a partnership is resident is the territory in

which the control and management of the partnership’s trade and

investment activities take place.

35

Bank levy to be ignored for other tax purposes

45         

In calculating profits or losses for the purposes of income tax or corporation

tax—

(a)   

no deduction is allowed in respect of the bank levy, and

(b)   

no account is to be taken of any amount which is paid by a member

40

of the relevant group to another member of the group for the

purposes of meeting or reimbursing the cost of the bank levy

charged in relation to the group.

 
 

Finance (No. 3) Bill
Schedule 19 — The bank levy
Part 5 — Supplementary provision

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Anti-avoidance

46    (1)  

This paragraph applies if—

(a)   

arrangements are entered into by one or more entities, and

(b)   

the main purpose, or one of the main purposes, of the entity, or any

of the entities, in entering into the arrangements or any part of them

5

is to avoid or reduce a charge or assessment to the bank levy.

      (2)  

In this paragraph “the relevant arrangements”—

(a)   

means the arrangements or the part of them referred to in sub-

paragraph (1)(b), and

(b)   

includes any part of those arrangements or of that part.

10

      (3)  

Sub-paragraph (4) applies if an effect of the relevant arrangements is that the

bank levy is not charged or assessed as it would have been in the absence of

the relevant arrangements.

      (4)  

The bank levy is charged or assessed as it would have been ignoring that

effect.

15

      (5)  

The cases covered by sub-paragraph (3) include (in particular) cases in

which the bank levy is charged or assessed but an effect of the relevant

arrangements is that the amount of the bank levy charged or assessed—

(a)   

is nil, or

(b)   

is otherwise less than it would have been in the absence of the

20

relevant arrangements.

      (6)  

In sub-paragraphs (3) and (5) references to the relevant arrangements do not

include those arrangements to the extent to which any of the following sub-

paragraphs applies to them.

      (7)  

This sub-paragraph applies to the relevant arrangements so far as their effect

25

is to increase, on an ongoing basis, the excluded equity and liabilities of the

relevant group or the relevant entity.

      (8)  

This sub-paragraph applies to the relevant arrangements so far as their effect

is to increase, on an ongoing basis, the long term equity and liabilities of the

relevant group or the relevant entity.

30

      (9)  

This sub-paragraph applies to the relevant arrangements so far as—

(a)   

their effect is to reduce, on an ongoing basis, the short term liabilities

of the relevant group or the relevant entity, and

(b)   

there is no corresponding increase, on an ongoing basis or otherwise,

in the amount of the funding, or the size of the financial obligations,

35

of the relevant group or the relevant entity which is not, or are not,

excluded equity and liabilities or long term equity and liabilities (it

being immaterial for this purpose whether or not any such funding

or obligation is recognised in the financial statements of the group or

entity).

40

     (10)  

This sub-paragraph applies to the relevant arrangements so far as—

(a)   

their effect is to reduce, on an ongoing basis, the long term equity and

liabilities of the relevant group or the relevant entity, and

(b)   

there is no corresponding increase, on an ongoing basis or otherwise,

in the amount of the funding, or the size of the financial obligations,

45

of the relevant group or the relevant entity which is not, or are not,

 
 

Finance (No. 3) Bill
Schedule 19 — The bank levy
Part 6 — Collection and management

325

 

excluded equity and liabilities (it being immaterial for this purpose

whether or not any such funding or obligation is recognised in the

financial statements of the group or entity).

     (11)  

This sub-paragraph applies to the relevant arrangements so far as they are

an agreement within paragraph 16(1)(c) and (d), 18(8)(c) and (d), 20(8)(c)

5

and (d), 22(1)(c) and (d) or 25(1)(c) and (d).

     (12)  

This sub-paragraph applies to the relevant arrangements so far as their effect

is to increase, on an ongoing basis, the amount of the high quality liquid

assets of the relevant group or the relevant entity.

     (13)  

If the relevant group is a foreign banking group or a relevant non-banking

10

group, in the sub-paragraphs above references to the relevant group are to

be read as references to the members of the group, collectively, which are

relevant members.

     (14)  

In sub-paragraph (13) “relevant member”—

(a)   

has the same meaning as in paragraph 18 or 20 (as the case may be),

15

and

(b)   

includes a relevant foreign bank covered by paragraph 17(17) or

19(17) (as the case may be).

47    (1)  

Section 1139 of CTA 2010 (definition of “tax advantage”) is amended as

follows.

20

      (2)  

In subsection (2)—

(a)   

omit the “or” after paragraph (c), and

(b)   

after paragraph (d) insert “, or

(e)   

the avoidance or reduction of a charge or assessment

to the bank levy under Schedule 19 to FA 2011 (the

25

bank levy).”

      (3)  

After subsection (3) insert—

“(3A)   

The avoidance or reduction of a charge or assessment to the bank

levy as a result of arrangements to which paragraph 46 of Schedule

19 to FA 2011 (bank levy: anti-avoidance) applies is to be ignored for

30

the purposes of subsection (2)(e) to the extent that it results from

arrangements, or part of arrangements, to which any of paragraph

46(7) to (12) of that Schedule applies.”

Part 6

Collection and management

35

Responsibility for collection and management

48    (1)  

The Commissioners for Her Majesty’s Revenue and Customs are

responsible for the collection and management of the bank levy.

      (2)  

In this Part of this Schedule “HMRC” means Her Majesty’s Revenue and

Customs.

40

 
 

Finance (No. 3) Bill
Schedule 19 — The bank levy
Part 6 — Collection and management

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Payment of the bank levy through the corporation tax system

49    (1)  

This paragraph applies where the bank levy is charged as provided for by

paragraph 4.

      (2)  

The bank levy is to be treated as if it were an amount of corporation tax

chargeable on the relevant group’s responsible member (see paragraph 53)

5

for the accounting period or periods determined in accordance with the

following sub-paragraphs.

      (3)  

Subject to what follows, the accounting period for which the bank levy is to

be treated as if it were an amount of corporation tax chargeable is to be—

(a)   

the responsible member’s accounting period which ends at the same

10

time as the chargeable period, or

(b)   

if it does not have an accounting period which ends at that time, its

accounting period during which the chargeable period ends.

      (4)  

If a proportion (“X%”) of the chargeable period falls in any other accounting

period of the responsible member, X% of the bank levy is to be treated as if

15

it were an amount of corporation tax chargeable for that other accounting

period.

50    (1)  

This paragraph applies where the bank levy is charged as provided for by

paragraph 5.

      (2)  

The bank levy is to be treated as if it were an amount of corporation tax

20

chargeable on the relevant entity for the accounting period or periods

determined in accordance with the following sub-paragraphs.

      (3)  

Subject to what follows, the accounting period for which the bank levy is to

be treated as if it were an amount of corporation tax chargeable is to be—

(a)   

the relevant entity’s accounting period which ends at the same time

25

as the chargeable period, or

(b)   

if it does not have an accounting period which ends at that time, its

accounting period during which the chargeable period ends.

      (4)  

If a proportion (“X%”) of the chargeable period falls in any other accounting

period of the relevant entity, X% of the bank levy is to be treated as if it were

30

an amount of corporation tax chargeable for that other accounting period.

51    (1)  

Paragraphs 49(2) and 50(2) are to be taken as applying all enactments

applying generally to corporation tax.

      (2)  

This is subject to—

(a)   

any provisions of the Taxes Acts (within the meaning of TMA 1970),

35

(b)   

any necessary modifications, and

(c)   

sub-paragraph (5).

      (3)  

The enactments mentioned in sub-paragraph (1) include—

(a)   

those relating to returns of information and the supply of accounts,

statements and reports,

40

(b)   

those relating to the assessing, collecting and receiving of

corporation tax,

(c)   

those conferring or regulating a right of appeal, and

(d)   

those concerning administration, penalties, interest on unpaid tax

and priority of tax in cases of insolvency under the law in any part of

45

the United Kingdom.

 
 

 
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Revised 31 March 2011