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Finance Act 2012

Background Note

38.The bank levy is an annual balance sheet charge based upon the chargeable equities and liabilities of all UK banks and building society groups, foreign banks and banking groups operating in the UK and UK banks in non-banking groups from 1 January 2011 onwards.

Joint ventures

39.A joint venture is an entity where two or more parties (“the venturers”) undertake an economic activity that is subject to joint control. International accounting standards currently allow joint ventures to be accounted for in two different ways, using either the equity method (where the investment in the joint venture is recorded at cost) or proportional consolidation where the consolidated balance sheet of the venturer includes its share of the assets and liabilities of the joint venture.

Double taxation relief

40.Part 7 of Schedule 19 to the Finance Act 2011 provides for double taxation relief to be given where a bank or banking group is doubly charged to the UK bank levy and an equivalent foreign levy.

41.Information regarding taxes is often exchanged by the United Kingdom with other territories using Exchange of Information articles in arrangements regarding Income Tax, Corporation Tax and Capital Gains Tax. However where such arrangements do not provide for Exchange of Information in respect of taxes of all kinds or the other territory does not consider their levy to be a tax then those arrangements cannot be used to exchange information relating to the bank levies.

42.The new provision is modelled on the legislation that enacts similar international tax enforcement arrangements for Income Tax, Corporation Tax and Capital Gains Tax.

Transitional provisions

43.Bank levy is treated as if it is corporation tax, and the relevant entity or, in the case of a banking group, the “the responsible member” (see paragraph 54, Schedule 19) is required to both make a return of the bank levy (as part of its company tax return) and to pay the bank levy.

44.Entities that pay the bank levy are required to do so under the provisions of The Corporation Tax (Installment Payments) Regulations 1998 (S.I. 1998/3175).

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