MLA B1: Profit and loss account FAQs

Q: What is meant by 'non-financial activities' in section B1.1?

A: The background to this item at B1.1 of MLAR is as follows:

  • the P&L needed to cater for a variety of firm types
  • most firms would primarily be engaged in lending/banking business
  • but some would only be doing lending business as an incidental activity (of which builders were an example when the return was being developed)
  • hence we needed a convenient way for the P&L to allow the reporting of two main aspects:
    • income/expenditure on lending and other financial activities (and the breakdown in B1.2 onwards reflects this)
    • income from other sources: this is the role of B1.1, and for convenience we have referred to this category as 'Gross profit from non-financial activities'

It is quite likely therefore that many firms who complete MLAR will not have any entry against B1.1, if their business is wholly in the financial sector.

To clarify the use of terms here, and where it may not necessarily be helpful to attempt to be too precise, we offer the following as a guide to the types of activities that we expect firms will include in 'financial activities':

  • banking, or money-lending, carried on by a bank, building society or other person;
  • debt-factoring, finance-leasing or hire-purchase financing;
  • insurance;
  • dealing in shares, securities, currency, debts or other assets of a financial nature; and
  • dealing in commodity or financial futures or options.

With this as background, it should now be easier to identify what is deemed by implication to be 'non-financial' activities.

Q: Where should types of provision movement, other than 'Write offs' or 'Provisions charge', for example acquisitions/disposals, transfers, exchange rate movements, recoveries, be reported in B2?

A: These will need to be 'posted' to B2 using either the 'write offs' or 'provisions charge' columns, since there is no 'Other' column.

Amounts that have the effect of reducing provisions balances could be posted via 'write-offs', and similarly amounts that increase provisions balances could go via 'provisions charge'

Q3: What is meant by ‘occupancy’ in section B1.11?

A: We have not provided any definition in MLAR Guidance, so firms have some discretion. But occupancy relates to premises/buildings and so would include such things as rates, rent, insurance of buildings, lighting, heating, depreciation and maintenance etc.