Textual Amendments
F1Sch. 19 paras. 15-15Z5 and cross-headings substituted for Sch. 19 paras. 15-23 (with effect in accordance with Sch. 9 para. 35 of the amending Act) by Finance Act 2018 (c. 3), Sch. 9 para. 2
15Z3(1)Paragraph 15Z4 applies for the purposes of Steps 1 and 2 in paragraph 15Z1 if—U.K.
(a)the designated FPE entity mentioned in paragraph 15Z1 (“E”) has liabilities to another entity which (in a case where the bank levy is charged as provided for by paragraph 4 (groups)) is not within sub-paragraph (5) (“E’s liabilities”),
(b)E recognises, as assets, amounts due from that other entity (“N”) to E (“N’s liabilities”),
(c)there is in place an agreement between E and N which makes net settlement provision, and
(d)that provision is legally effective and enforceable.
(2)In sub-paragraph (1)(c), “net settlement provision” means provision for there to be a single net settlement—
(a)if a netting event occurs, or
(b)at the option of E or N, if a netting event occurs.
(3)The reference in sub-paragraph (2) to a “single net settlement” is a reference to a single net settlement of—
(a)all E’s liabilities (so far as covered by the provision mentioned in sub-paragraph (1)(c)) and
(b)all N’s liabilities (so far as covered by that provision).
(4)But a provision for there to be single net settlement—
(a)at the option of E, but not at the option of N, if a netting event occurs, or
(b)at the option of N, but not at the option of E, if a netting event occurs,
is not to be treated as a net settlement provision for the purposes of sub-paragraph (1)(c).
(5)An entity is within this sub-paragraph if it is—
(a)a UK resident entity which is a member of a UK sub-group,
(b)a chargeable UK resident entity, or
(c)a relevant foreign bank which is a member of the relevant group.
(6)For the purposes of sub-paragraph (1)—
(a)“agreement” includes an agreement which forms part of a multi-lateral agreement, arrangement or trading facility,
(b)references to amounts due from N include securities provided by E to N as collateral, but only where E recognises those securities in its balance sheet or statement of financial position, and
(c)“a netting event occurs”—
(i)in relation to E, if the insolvency or bankruptcy of E gives rise to the termination of any arrangements under which any liability covered by the provision mentioned in sub-paragraph (1)(c) arises, or
(ii)in relation to N, if the insolvency or bankruptcy of N gives rise to the termination of any arrangements under which such a liability arises.
(7)Section 556 of CTA 2009 (meaning of securities and similar securities) applies for the purposes of sub-paragraph (6) as it applies for the purposes of Chapter 10 of Part 6 of that Act.]