BKLM315200 | Chargeable equity and liabilities: election to disregard non-UK allocated equity and liabilities

Paragraphs 15D to 15F of Schedule 19

Specific rules can apply if there is a UK resident in a banking group or a standalone entity with a Foreign Permanent Establishment (FPE). FPEs exist where a UK resident entity carries on a trade in a territory outside the UK through a permanent establishment.

Where a group is within the charge to Bank Levy and it has a FPE, the group’s responsible member (see BKLM442000) may elect to disregard the non-UK allocated equity and liabilities attributable to all or some of the group’s foreign permanent establishments.

If a bank or building society is not a member of a group and has an FPE it may also elect to disregard the equity and liabilities attributable to all or some of those foreign permanent establishments.

Where an entity or group has more than one FPE it may choose which of its FPEs should have their non-UK allocated equity and liabilities disregarded.

An election should be made in the relevant corporation tax return of the group’s responsible member for a chargeable period in respect of each relevant UK resident entity with a FPE, and it should list any entities and FPEs to which it applies.

Once an election has been made the entity to which it relates is described as a “designated FPE entity”.

An election can be revoked at any time.