PART 3CREDIT ARRANGEMENTS
F1TRANSACTIONS WHICH ARE CREDIT ARRANGEMENTS
Securitisation transactions2A.
A securitisation transaction must be treated as a transaction falling within section 7(2)(a).
TRANSACTIONS WHICH ARE NOT CREDIT ARRANGEMENTS
Liabilities that do not arise from capital expenditure3.
(1)
The liabilities of a local authority specified in paragraph (2) are liabilities specified for the purposes of section 7(3)(c) (exclusion of certain liabilities from definition of “qualifying liabilities”).
(2)
The liabilities specified for the purposes of paragraph (1) are liabilities that do not arise from a transaction which results in the local authority being required, in accordance with proper practices, to recognise a F2non-current asset which is not a financial asset in any balance sheet.
Retirement benefits4.
(1)
Liabilities for retirement benefits appropriated to a pension reserve in accordance with proper practices are liabilities specified for the purposes of section 7(3)(c).
(2)
For the purposes of paragraph (1) and regulation 30, “retirement benefits” means benefits payable pursuant to F3statutory requirements under an arrangement accounted for as a defined benefit pension plan or as other long-term employee benefits (as defined in accordance with proper practices).
SUPPLEMENTARY PROVISION
Varied transactions5.
For the purposes of Chapter 1 of Part 1 (capital finance etc.), a local authority shall be taken to have entered into a credit arrangement where—
(a)
on or after 1st April 2004, it enters into a transaction (“the new transaction”) which varies a transaction entered into previously, whether before, on or after 1st April 2004 (“the earlier transaction”);
(b)
the earlier transaction did not result in the local authority being taken to have entered into a credit arrangement; and
(c)
the local authority would, if it had entered into the earlier transaction as varied by the new transaction on—
(i)
the date on which the earlier transaction was entered into; or
(ii)
if later, 1st April 2004,
be taken to have entered into a credit arrangement,
and the date on which it is taken to have entered into the credit arrangement by virtue of this regulation is the date on which it enters into the new transaction.
COST OF CREDIT ARRANGEMENTS
Calculation of cost of credit arrangementsF46.
For the purposes of section 8(2) (entry into a credit arrangement or variation to be treated as the borrowing of an amount equal to the cost of the arrangement or variation), the cost of a credit arrangement or variation of a credit arrangement is—
(a)
in the case of a securitisation transaction, an amount equal to the value of the consideration received by the authority as a result of that transaction, or
(b)
in all other cases, the amount of the liability in respect of that arrangement or variation which is shown, in accordance with proper practices, in the authority’s accounts.