BKLM323200 - Chargeable equity and liabilities: relevant entities and groups: relevant non-banking groups: Type B equity and liabilities

Paragraph 19(10) of Schedule19

Type B equity and liabilities are those equity and liabilities that relate to any entity that:

  • is a member of the relevant non-banking group (see BKLM240000)
  • but is not a member of the relevant UK banking sub-group, and
  • is a UK resident bank (see BKLM243000).

The starting point for determining the Type B liabilities are the UK resident entity's financial statements which should be prepared under either IAS or UK GAAP.

To determine the chargeable equity and liabilities that make up the Type B equity and liabilities, the following steps are taken:

  1. ignore excluded equity and liabilities (see BKLM330000) within the total equity and liability figures taken from the relevant UK resident entity's financial statements
  2. then make any intra-group adjustments or eliminations
  3. adjust for relevant legally enforceable netting (see BKLM350000)
  4. adjust for joint ventures (see BKLM323500), and
  5. finally, reduce the remaining equity and liabilities (but not below nil) by the amount of the entity's relevant high quality liquid assets (see BKLM360000).

To avoid double relief, the deduction for high quality liquid assets should be restricted by any amounts which have already been excluded through adjustments for netting.

Note: For chargeable periods ending on or before 31 December 2014, any high quality liquid assets should be set against long term equity and liabilities before short term liabilities.

For chargeable periods ending on or after 1 January 2015, there is no prescribed order of set off for high quality liquid assets, but where high quality liquid assets are set against short term liabilities, the reduction is halved.

Type B equity and liabilities may be ignored if they meet the de minimis conditions (see BKLM380000).