Finance Act 2010

“Member of a banking group” U.K.

45 (1) A company is a “member of a banking group” at any time if— U.K.

(a) it is within sub-paragraph (2) at that time, or

(b) it was within that sub-paragraph immediately before the chargeable period.

(2) A company is within this sub-paragraph if—

(a) it is a member of a group,

(b) any of conditions A to C is met, and

(c) the group does not meet the exempt activities test.

(3) Condition A is that the principal company of the group is a UK resident bank or a relevant foreign bank.

(4) Condition B is that—

(a) the principal company of the group is a company which is not resident in the United Kingdom but which (if it were so resident) would be a UK resident bank, or

(b) the principal company of the group is a company which is not resident in the United Kingdom, and is a member of a partnership which is not so resident, but which (if both the company and the partnership were so resident) would be a UK resident bank,

and (in either case) any member of the group is a UK resident bank or a relevant foreign bank.

(5) Condition C is that—

(a) the principal company is the holding company of another company, and

(b) if that other company were the principal company of the group, condition A or B would be met.

(6) For the purposes of condition C a company (“H”) is a “holding company” of another company (“S”) if—

(a) H is an investment company, and

(b) S is—

(i) an effective 51% subsidiary of H, and

(ii) not an effective 51% subsidiary of any company which is not an investment company.

(7) A group meets the exempt activities test if at least 90% of the trading income of the group for the relevant period is derived from exempt activities.

(8) For this purpose—

• “exempt activities” means—

  (a)

  insurance activities, asset management activities and related activities, and

  (b)

  activities carried on by a company which is not a financial trading company (or a company which would be a financial trading company if it were resident in the United Kingdom) other than lending activities or dealing on own account,

• “the relevant period”, in relation to a group, means the last period of account of the group ending no later than the end of the chargeable period, and

• “the trading income of the group” for the relevant period is to be calculated in accordance with paragraph 46.

(9) In sub-paragraph (8)—

• “insurance activities” means—

  (a)

  the effecting or carrying out of contracts of insurance by a regulated insurer, and

  (b)

  investment business that arises directly from activities falling within paragraph (a);

• “lending activities” means—

  (a)

  acceptance of deposits or other repayable funds,

  (b)

  lending of money, including consumer credit, mortgage credit, factoring (with or without recourse) and financing of commercial transactions (including forfeiting),

  (c)

  finance leasing (as lessor),

  (d)

  issuing and administering means of payment,

  (e)

  provision of guarantees or commitments to provide money,

  (f)

  money transmission services,

  (g)

  provision of alternative finance arrangements, and

  (h)

  other activities carried on in connection with activities falling within any of paragraphs (a) to (g);

• “related activities” means—

  (a)

  activities which are ancillary to insurance activities or asset management activities of any company which is a member of the group (whether or not the company carrying on the insurance activities or asset management activities), and

  (b)

  activities which would not be carried on but for such insurance activities or asset management activities being carried on,

  but does not include dealing on own account.

(10) In sub-paragraph (9)—

• “activities” includes buying, holding, managing and selling assets;

• “regulated insurer”, in relation to a group, means a member of the group that—

  (a)

  is authorised under the law of any territory to carry on insurance business, or

  (b)

  is a member of a body or organisation which is so authorised.

(11) A company which is a member of a banking group ceases to be a member of a banking group when it ceases to be within sub-paragraph (2), but only if it ceases to be within that provision as a result of—

(a) an arm's length transaction undertaken for wholly commercial purposes, or

(b) following a recommendation of a relevant regulatory body.

(12) For the purposes of sub-paragraph (11) obtaining a tax advantage is not a commercial purpose.

(13) “Tax advantage” means—

(a) a relief from tax or increased relief from tax (relief here including a tax credit),

(b) a repayment of tax or increased repayment of tax,

(c) the avoidance or reduction of a charge to tax or an assessment to tax (obtained in any way), or

(d) the avoidance of a possible assessment to tax (so obtained),

and, for this purpose, “tax” includes bank payroll tax and any other tax.

(14) In sub-paragraph (11) “relevant regulatory body” means—

(a) the Financial Services Authority, or

(b) a body discharging functions under the law of a country or territory outside the United Kingdom corresponding to functions discharged by the Financial Services Authority.

(15) In this paragraph “dealing on own account” has the same meaning as in Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments (see Article 4(1)(6)).