Paragraph 15Z3 F1

(1)

Paragraph 15Z4 applies for the purposes of Steps 1 and 2 in paragraph 15Z1 if—

(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.

Annotations

Textual amendments

F1: Sch. 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