Part 3: Banking Section 17 and and Schedule 3: Banking companies: surcharge Details of the section and schedule Chapter 4 - Surcharge on banking companies
New section 269D gives an overview of the chapter.
	New subsection 269DA(1) introduces a surcharge equal to 8% of a banking company’s surcharge profits so far as they exceed its surcharge allowance for an accounting period. The surcharge is treated as if it were an amount of corporation tax. A banking company is defined at sections 269B to 269BC of Part 7A of CTA 2010.
	New subsection 269DA(2) defines surcharge profits for an accounting period as the sum of TTP + NBGR + NBPLR + RTOG - NBTIG - RDEC. TTP is the taxable total profits of the banking company. NBGR is the amount of group relief surrendered to the banking company from a surrendering company that is not a banking company. NBPLR is the amount of any non-banking or pre-2016 loss relief that has been deducted in arriving at the taxable total profits. RTOG is the sum of any relevant chargeable gains transferred out to non-banking companies. NBTIG is the sum of any chargeable gains transferred in from non-banking companies. RDEC is the amount brought into account by the company as an R&D expenditure credit.
	New subsection 269DA(3) defines surcharge allowance by reference to section 269DE where a banking company is a member of a group that has two or more banking companies.
	New subsection 269DA(4) defines surcharge allowance by reference to section 269DJ where a banking company is not in a group (or is not in a group containing other banking companies).
	New section 269DB defines non-banking group relief as group relief from a surrendering company that is not a banking company or an EEA banking company. The Treasury can make regulations specifying whether a company is an EEA banking company.
	New subsections 269DC(1) to (15) define non-banking or pre-2016 loss relief as being the aggregate of any amounts that are deducted in determining the taxable total profits in respect of losses arising when a company was not a banking company and losses arising prior to 1 January 2016.
	The losses referred to in new subsections s269DC(1) to (15) comprise the following carried-forward amounts:
	trading losses
	non-trading deficits
	management expenses
	UK property losses
	overseas property losses
	excess capital allowances on special leasing
	miscellaneous losses
	capital losses
	any used amount in respect of non-trading losses on intangible fixed assets.
	New subsections 269DC(16) to (22) define a non-banking or pre-2016 non-trading loss on intangible fixed assets and provide for the calculation of the used amount in prescribed circumstances.
	New subsections 269DD(1) to (4) define a relevant transferred-out gain and non-banking transferred-in gain.
	New subsections 269DE(1) to (5) provide for a £25,000,000 surcharge allowance for groups containing two or more banking companies. Each banking company must specify its surcharge allowance in its company tax return for the period. A banking company can be allocated surcharge allowance up to a limit of £25,000,000, which includes any allowance from a time when it was a member of a group with no other banking companies. The allowance is proportionately reduced where the accounting period is less than 12 months.
	New subsections 269DE(6) and (7) require the surcharge allowance specified in a banking company's company tax return and the surcharge allowance set against controlled foreign company (CFC) apportioned profits to not exceed the surcharge allowance available to that company. Where it does, the provisions in section 269DK apply.
	New section 269DF provides for a group surcharge allowance of £25,000,000 for groups containing two or more banking companies, who will be required to nominate one banking company to deal with the surcharge allowance on behalf of the group. The group surcharge allowance is given by reference to the accounting period of the nominated company, and is proportionately reduced where the nomination applies for only part of the period or if the period is less than 12 months. The nomination must state the date on which it is to take effect (this can be earlier than the date of nomination) and be signed by the appropriate person on behalf of each banking company. The nomination ceases to have effect in prescribed circumstances and the Commissioners may by regulations make further provisions about a nomination.
	New section 269DG provides for the nominated company to submit a group allowance allocation statement for each accounting period. If the nominated company changes before the statement is submitted then a new nominated company must submit the statement. The statement must be received by HM Revenue & Customs (HMRC) within 12 months of the end of the accounting period of the nominated company or at such later time if an officer of HMRC allows. The statement must comply with the requirements of section 269DI.
	New section 269DH makes provision for revised statements to be made in prescribed circumstances.
	New section 269DI sets out the information to be included in the statement and the limits on the amount of allowance that can be allocated to each banking company. It also makes provision for revised statements and time limits. If a company fails to comply an officer of HMRC may amend a statement as he thinks fit and send a copy of the notice to each banking company. The Commissioners for HMRC may by regulations make further provision about a group allowance allocation statement.
	New subsections 269DJ(1) to (4) set the surcharge allowance at £25,000,000 for banking companies that are not in a group (or are not in a group containing other banking companies). The allowance is proportionally reduced where the accounting period is less than 12 months.
	New subsections 269DJ(5) and (6) require the surcharge allowance specified in a banking company's company tax return and the surcharge allowance set against CFC apportioned profits to not exceed £25,000,000. Where it does, the provisions in section 269DK apply.
	New section 269DK requires the company tax return to be amended where an excessive claim to surcharge allowance has been made. Failing that, an officer of HMRC may make an assessment to tax for the amount that ought to have been charged. This is in addition to the power to make a discovery assessment.
	New subsections 269DL(1) to (4) provide that enactments applying generally to corporation tax shall apply to the surcharge. But this is subject to subsection (5).
	New subsection 269DL(5) provides that references to corporation tax in the Corporation Tax (Treatment of Unrelieved Surplus Advances Corporation Tax) Regulations 1999 does not include the surcharge and references to profits charged does not include surcharge profits.
	New subsections 269DL(6) to (9) restrict credits for foreign tax arising to a non-banking company or arising before 1 January 2016 from being set against the surcharge. Any amounts of eligible foreign tax are to be set off firstly against the corporation tax payable and any credit then remaining is to be set off against the surcharge.
	New subsection 269DL(10) defines the Taxes Acts.
	New section 269DM requires a banking company or the responsible company under relevant group payment arrangements to inform an officer HMRC, on or before the date of a payment, of amounts of surcharge included in the payment. This requirement is to be treated as an information notice for the purposes of Part 7 of Schedule 36 to Finance Act 2008.
	New subsections 269DN(1) and (2) define arrangements that seek to avoid or reduce the surcharge. These are:
	the transfer in substance of all or a significant part of the surcharge profits of a banking company to a non-banking company, or
	the transfer of a loss or deductible amount to a banking company from a non-banking company which results in the surcharge profits being reduced or eliminated.
	The main purpose or one of the main purposes of the arrangements must be to avoid or reduce the surcharge.
	New subsection 269DN(3) counteracts the arrangements as if they had not taken place.
	New subsection 269DN(4) provides definitions for various terms used in the section.
	New section 269DO defines various terms used in the Chapter.
	New subsections 269DO(2) - (7) makes some minor amendments to the definition of a banking company for the purposes of determining surcharge profits. These subsections provide a targeted exclusion for asset management companies where they have an ancillary deposit taking business and for other companies where accepting deposits represents a small part of their balance sheet and they are the only company in the UK group which accepts deposits.