Introduction Details of the Schedule Part 3 – Definitions
80.Paragraph 43(1) defines a “UK resident bank” as a company resident in the UK that is not an excluded company (defined in paragraph 44(9)); which is authorised by the Financial Services Authority (FSA) under section 31 of the Financial Services and Markets Act 2000, to carry out regulated activities and which accepts deposits (see paragraph 44(1)(a)) or is both a BIPRU 730k firm and a full scope BIPRU investment firm (terms defined in the FSA Handbook) whose activities consist wholly or mainly of any of the regulated activities described in paragraph 44(1)(b) to (f) and which meets the capital resources condition (as set out in paragraph 44). The relevant regulated activity or activities (as defined in paragraph 44(1)) must be carried on wholly or mainly in the course of trade.
81.Paragraph 43(2) provides that “UK resident bank” also includes a company that is resident in the UK, is not an excluded company and is a member of a partnership which meets the conditions set out in sub-paragraph (1)(b) to (d).
82.Paragraph 43(3) defines “relevant foreign bank” as a company that is not resident in the UK, but which carries on a trade in the UK through a permanent establishment; is not an excluded company; is authorised by the FSA to carry out regulated activities; and which is either a deposit-taker or is both a BIPRU 730k firm and a full scope BIPRU investment firm whose activities consist wholly or mainly of any of the relevant regulated activities described in paragraph 44(1)(b) to (f) and meets the capital resources condition. The relevant regulated activity or activities must be carried on wholly or mainly in the course of the trade.
83.Paragraph 43(4) provides that “relevant foreign bank” also includes a company that is not resident in the UK and is not an excluded company but which is a member of a partnership which meets the conditions in sub-paragraph (1)(b) to (d).
84.Paragraph 44(1) defines “relevant regulated activity” by reference to certain provisions of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001. The relevant regulated activities are accepting deposits, dealing in investments as principal or agent, arranging deals in investments, safeguarding and administering investments and entering into regulated mortgage contracts.
85.Paragraph 44(2) defines the “capital resources condition”. The condition is that a company (or partnership – see paragraph 44(6)) has a capital resources requirement (as defined in the FSA Handbook) of at least £100 million.
86.Paragraph 44(3) defines the “capital resources condition” where the company is a member of a group and there are other companies in that group or partnerships of which companies in that group are members which meet either of the conditions in sub-paragraph (4) and provides an aggregation rule.
87.Paragraph 44(4) sets out the conditions referred to in sub-paragraph (3) which are that the company or partnership is both a BIPRU 730k firm and a full scope BIPRU investment firm; or a company or partnership which carries out any deposit-taking activities in the UK.
88.Paragraph 44(5) provides that the capital resources requirement is that requirement as at the end of the last period of account ending no later than the end of the chargeable period.
89.Paragraph 44(6) provides that where determining whether a company which is a member of a partnership is a UK resident bank or a relevant foreign resident bank references to the company in sub-paragraph (2) are to be read as references to the partnership.
90.Paragraph 44(7) explains how to determine the capital resources requirement where the company or partnership does not prepare its accounts in sterling.
91.Paragraph 44(8) provides that where a company carries on a trade in the UK through a permanent establishment, the capital resources requirement in respect of the UK permanent establishment is to be determined in the same way as capital would be attributed to the permanent establishment for corporation tax purposes (in accordance with Chapter 4 of Part 2 of the Corporation Tax Act 2009).
92.Paragraph 44(9) defines the phrase “excluded company” for the purposes of the BPT. A company will be an excluded company if it comes within only one of sub-paragraphs (a) to (k).
93.Paragraph 44(10) defines “asset management activities” for the purposes of BPT.
94.Paragraph 44(11) defines “linked entity” for the purposes of BPT.
95.Paragraph 44(12) identifies the terms used in paragraphs 43 and 44 which have the same meaning as in the FSA Handbook.
96.Paragraph 44(13) provides that for the purposes of BPT, a company is treated as a BIPRU 730k firm and a full scope BIPRU investment firm if its activities in the UK would qualify it as such a firm if its registered office (or head office as the case may be) were not outside the UK.
97.Paragraph 44(14) to (17) provides that HM Treasury may by order amend paragraph 44 and sets out the procedure in relation to such an order. Any order may have effect in relation to any time after 9 December 2009 and will be subject to the affirmative resolution procedure.
98.Paragraph 45(1) and (2) provides that a company is a “member of a banking group” at any time if it is a member of a group at that time or immediately before the start of the chargeable period, and that group does not meet the exempt activities test (see sub-paragraphs (7) and (8)) and any of the conditions A to C as set out in sub-paragraphs (3) to (5) is met.
99.Paragraph 45(6) defines “holding company” for the purposes of sub-paragraph (5) (that is condition C). The principal company will be a holding company of another company if the principal company is an investment company and that other company is an effective 51 per cent subsidiary of the principal company and is not an effective 51 per cent subsidiary of any company that is not an investment company.
100.Paragraph 45(7) provides that a group meets the exempt activities test if at least 90 per cent of the group’s trading income for the relevant period is derived from exempt activities.
101.Paragraph 45(8) defines “exempt activities” and “the relevant period” and states that “the trading income of the group” for the relevant period is to be calculated in accordance with paragraph 46.
102.Paragraph 45(9) defines “insurance activities”, “lending activities” and “related activities” and provides that “related activities” does not include dealing on own account.
103.Paragraph 45(10) defines “activities” and “regulated insurer” for the purposes of sub-paragraph (9).
104.Paragraph 45(11) provides that a company ceases to be a member of a banking group if it ceases to meet the conditions of sub-paragraph (2) as a result of an arm’s length transaction undertaken for wholly commercial purposes or following a recommendation of a relevant regulatory body.
105.Paragraph 45(12) provides that obtaining a tax advantage is not a commercial purpose.
106.Paragraph 45(13) defines “tax advantage” for the purposes of this Schedule and defines “tax” as including bank payroll and any other tax.
107.Paragraph 45(14) defines “relevant regulatory body” for the purposes of sub-paragraph (11) as the FSA or a comparable body in a foreign jurisdiction.
108.Paragraph 45(15) defines “dealing on own account” for the purposes of paragraph 45.
109.Paragraph 46 applies for the purposes of calculating the trading income of the group for the relevant period and defines a number of terms used within the paragraph.
110.Paragraph 47 defines “investment company” and “UK resident investment company”.
111.Paragraph 48 defines “financial trading company”, “UK resident financial trading company” and “relevant foreign financial trading company”.
112.Paragraph 49(1) contains definitions of terms used in the Schedule.
113.Paragraph 49(2) provides that section 170(2) to (11) of the Taxation of Chargeable Gains Act 1992 applies to the Schedule in respect of the terms used in connection with “group”, “principal company”, “effective 51% subsidiary”, “company” etc. in the same way as it applies to sections 171 to 181 of that Act.
114.Paragraph 49(3) provides that section 993 of the Income Tax Act 2007 applies to the Schedule in respect of the interpretation of “connected person”.
115.Paragraph 49(4) provides that questions of residency for the purposes of the Schedule are to be determined in accordance with the rules relating to corporation tax.