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Paragraph 15Z3 and 15Z4 of Schedule 19

When determining the non-UK allocated equity and liabilities attributable to a foreign permanent establishment (FPE) of a designated FPE entity an adjustment for netting should be made at step 1 and step 2 (see BKLM315700).

For guidance on netting, including the definition of net settlement provision, a netting event and the general conditions for netting (see BKLM315613).

When determining the designated FPE entity’s assets at step 1 reduce the designated FPE entity’s amount of net settlement assets (but not below nil) by the amount of net settlement liabilities.

»Ê¹ÚÌåÓýapp proportion by which the designated FPE entity’s net settlement assets are reduced by net settlement liabilities is Z%.

When determining the amount of the FPE assets at step 2 ignore the above reduction in respect of net settlement liabilities and instead reduce the FPE’s net settlement assets by Z%.