INTM267723 | The attribution of capital to foreign banking permanent establishments in the UK: The approach in determining an adjustment to funding costs - STEP 2: Risk weighting the assets: intra-company netting of third party assets

From HM Revenue & Customs · International Manual

Netting agreements are one of the tools used by banks to manage credit risk and to reduce their capital requirements. HMRC will allow the netting of intra-company assets and liabilities when calculating the amount of capital to be attributed to the permanent establishment for tax purposes to the extent that:

  • the Prudential Regulation Authority (PRA) would allow netting of assets and liabilities, and

  • provided that the PRA’s requirements for netting between different parts of a company, such as an acceptable netting agreement, are met