3.—(1) This paragraph applies where a Passenger Transport Authority—
(a)in accordance with article 2(1)(a), is to be treated as receiving a sum;
(b)in accordance with article 2(1)(b), is to be treated as receiving consideration; or
(c)in accordance with article 2(1)(c), is to be treated as incurring additional liabilities in respect of a financial year.
(2) Where paragraph (1) above applies, Part IV of the Act shall apply as if, but only as if, there were required to be available to the Authority an amount of credit cover equal to—
(a)where sub-paragraph (a) or (b) paragraph (1) above applies—
(i)50 per cent. of the amount net of any corporation tax payable in respect of it which, if the sum or consideration had been received by the Authority, would have been, respectively, the amount of the capital receipt for the purposes of section 59 of the Act or the amount of the notional capital receipt for the purposes of section 61(4) of the Act,
less
(ii)such amount set aside by the Executive as they have decided should be added in the financial year to the amounts set aside by them to meet expenditure in respect of long-term liabilities, as described in article 5(4) below, which are not liabilities owed to the relevant Authority; and
(b)where sub-paragraph (c) of paragraph (1) above applies, the aggregate of—
(i)if the Executive concerned incurs additional liabilities as described in article 2(3)(a), the amount of the additional liabilities calculated under that sub-paragraph;
(ii)if that Executive incurs additional liabilities as described in article 2(3)(b), the initial cost of any such lease as is referred to in that sub-paragraph; and
(iii)if that Executive incurs additional liabilities as described in article 2(3)(c), the amount of the credit cover referred to in that sub-paragraph.
(3) Each of the following amounts constitutes for the purposes of this article an amount of credit cover—
(a)an amount which, in accordance with a determination of the Authority referring to the sum, consideration or additional liabilities, as the case may be, is set aside from the usable part of the Authority’s capital receipts or from a revenue account of the Authority for the financial year in question as provision to meet credit liabilities (being an amount over and above what they are required so to set aside by virtue of any other provision of Part IV of the Act); or
(b)an amount by which, in accordance with a determination of the Authority, any credit approval issued or transferred to the Authority for the financial year in question, to the extent that they have not made a determination with respect to it under section 56(1) of the Act, is treated as reduced.
(4) Any amount falling to be set aside in accordance with paragraph (3)(a) above shall be set aside, and any reduction in accordance with paragraph (3)(b) above of a credit approval which is a basic credit approval shall be treated as taking place, on the last day of the financial year of the Authority during which the Executive concerned—
(a)receives a sum or consideration such as is referred to in article 2 (i);
(b)incurs additional liabilities on the relevant date as described in article 2(3)(a);
(c)becomes the lessee under a lease such as is referred to in article 2(3)(b); or
(d)would, if it were a local authority, be required to secure an amount of credit cover such as is referred to in article 2(3)(c).
(5) A credit approval which is a supplementary credit approval shall not be treated as reduced in accordance with paragraph (3)(b) above by any amount greater than that which the relevant Authority is satisfied is the amount of expenditure incurred by the Executive concerned in the financial year described in paragraph (4) above for the purpose and during the period specified in that credit approval.
(6) Any reduction in accordance with paragraph (3)(b) above of a credit approval to which paragraph (5) above applies shall be treated as taking place on the earlier of either the last day of the period specified in the approval or the last day of the financial year described in paragraph (4) above.
(7) In a case to which paragraph (4) above applies, a determination by an Authority under paragraph (3) above shall not be made later than 30th September in the financial year following that in which, in accordance with paragraph (4) above, an amount is to be set aside or a basic credit approval is to be treated as reduced.
(8) In a case to which paragraph (6) above applies, a determination by an Authority under paragraph (3) above shall not be made later than 31st May in the financial year following that in which in accordance with paragraph (6) above the supplementary credit approval is to be treated as reduced.