BKLM315800 | Chargeable equity and liabilities: netting: non-UK allocated equity and liabilities

Paragraph 15Z3 and 15Z4 of Schedule 19

When determining the non-UK allocated equity and liabilities attributable to a foreign permanent establishment (FPE) of a designated FPE entity an adjustment for netting should be made at step 1 and step 2 (see BKLM315700).

For guidance on netting, including the definition of net settlement provision, a netting event and the general conditions for netting (see BKLM315613).

When determining the designated FPE entity’s assets at step 1 reduce the designated FPE entity’s amount of net settlement assets (but not below nil) by the amount of net settlement liabilities.

The proportion by which the designated FPE entity’s net settlement assets are reduced by net settlement liabilities is Z%.

When determining the amount of the FPE assets at step 2 ignore the above reduction in respect of net settlement liabilities and instead reduce the FPE’s net settlement assets by Z%.