(1)For the purposes of section 5, a relevant authority is a “smaller authority” for a financial year if—
(a)where that year is the year in which the authority was established, the qualifying condition is met for that year,
(b)where that year is the year following that in which the authority was established, the qualifying condition is met for that year or the previous year, and
(c)where that year is the second or any subsequent year following that in which the authority was established, the qualifying condition is met for that year or either of the two previous years.
(2)The qualifying condition is met for a relevant authority and a financial year if the higher of the authority’s gross income for the year and its gross expenditure for the year does not exceed £6.5 million.
(3)For the purpose of determining, at a time when a relevant authority’s gross income or expenditure for a financial year cannot be accurately determined, whether subsection (2) applies or will apply to the authority, that subsection is to be read as referring to the authority’s estimated gross income or expenditure (as the case may be).
(4)The Secretary of State may by regulations make provision about the application of this Act (including in its application by virtue of section 5) or any provision made under it in a case where—
(a)an authority is treated as a smaller authority for a financial year, and
(b)the authority was not in fact a smaller authority for that year.
(5)The Secretary of State may by regulations amend this section.