BKM402900 - Banking surcharge: definition of a group for purpose of banking surcharge

CTA10/S269BD

Meaning of group - the legislation defining a banking company for the purpose of the bank surcharge measure uses an accounting definition of a group. A group comprises the parent company and all members of the group that are included in the consolidated financial statements at the time they are drawn up under International Accounting Standards (IAS) or US GAAP.

In practice this means where an entity is:

• included in the parent’s consolidated financial statements drawn up under IAS, or
• would have been included in the parent’s consolidated financial statements had these been drawn up under IAS the entity will be a member of that group for so much of its chargeable accounting period as falls in the period covered by the consolidated financial statements.

The entity will be a member of that group for so much of its chargeable accounting period as falls in the period covered by the consolidated financial statements.

In order to reduce the compliance burden where a group’s consolidated financial statements are drawn up under US GAAP, the definition of the relevant group differs provided certain conditions are met. These conditions are where:

• the parent is not resident in the UK, and
• US GAAP is a generally accepted basis of preparation for financial statements for an entity resident in the territory of the parent entity, and
• the parent entity prepares consolidated financial statements under US GAAP

Then US GAAP may be used to determine the members of the relevant group.