2012 No. 265
The Local Authorities (Capital Finance and Accounting) (England) (Amendment) Regulations 2012
Made
Laid before Parliament
Coming into force in accordance with regulation 1(2) and (3)
The Secretary of State, in exercise of the powers conferred by sections 7(2)(b) and (3)(c), 8(3), 9(3)(b), 16(2)(a) and 21(2)(b) of the Local Government Act 20031, makes the following Regulations:
Citation, commencement and application1
1
These Regulations may be cited as the Local Authorities (Capital Finance and Accounting) (England) (Amendment) Regulations 2012.
2
Regulations 1 to 3(a), 4(2), 7(b) and 8 come into force on 31st March 2012.
3
Regulations 3(b) and (c), 4(1) and (3), 5, 6 and the remainder of regulation 7 come into force on 1st April 2012.
4
These Regulations apply only in relation to local authorities in England.
Amendment of Regulations2
Definitions3
In regulation 1 (interpretation)3, in paragraph (5)—
a
in the definition of “money market fund”, for paragraph (a), substitute—
a
in accordance with Directive 2009/65/EC4 of the European Parliament and of the Council of 13 July 2009 on the co-ordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities, is an undertaking for collective investment in transferable securities subject to that Directive; and
b
omit the definition of “multilateral development bank”; and
c
after the definition of “secure tenant” insert—
“securitisation transaction” means a disposal for consideration by a local authority of all or part of its interest in specified revenues, where disposal includes both sale and assignment;
Credit arrangements4
1
Before regulation 3 (liabilities that do not arise from capital expenditure) and the sub part heading “Transactions which are not credit arrangements”, insert—
TRANSACTIONS WHICH ARE CREDIT ARRANGEMENTS
Securitisation transactions2A
A securitisation transaction must be treated as a transaction falling within section 7(2)(a).
2
In regulation 3(2), for the words “fixed asset”, substitute “non-current asset which is not a financial asset”.
3
For regulation 6 (calculation of cost of credit arrangements), substitute—
6
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.
Bonds5
1
In regulation 7 (repayment of loan etc to a local authority)—
a
in paragraph (2), for “paragraph (3)” substitute “paragraphs (3) and (4)”; and
b
after paragraph (3), insert—
4
A sum paid to a local authority to redeem a bond on its maturity or for the purchase of a bond does not constitute repayment of a loan or other financial assistance.
2
For regulation 7A (loan capital)5, substitute—
Bonds7A
1
Subject to paragraph (2), for the purposes of Chapter 1 of Part 1, a sum received by a local authority in respect of—
a
the redemption on maturity of a bond, or
b
the disposal of a bond,
must be treated as a capital receipt.
2
Paragraph (1) applies only if—
a
the acquisition of the bond was prior to 1st April 2012, and
b
expenditure on the acquisition was treated as capital expenditure.
Capital receipts6
After regulation 9A (Social HomeBuy receipts)6, insert—
Securitisation transaction receipts9B
For the purposes of Chapter 1 of Part 1, any sum received as consideration by a local authority as the result of a securitisation transaction which, apart from this regulation, would not be a capital receipt, must be treated as a capital receipt.
Expenditure to be capital expenditure7
In regulation 25 (expenditure to be capital expenditure)7—
a
in subsection (1)(d), omit “or loan capital”;
b
for subsection (1)(ea), substitute—
ea
expenditure incurred on the acquisition, production or construction of assets for use by, or disposal to, a person other than the local authority which would be capital expenditure if those assets were acquired, produced or constructed for use by the local authority; and
c
omit subsection (3)(b).
Proper practices8
For paragraph (b) of regulation 31 (proper practices), substitute—
b
“Service Reporting Code of Practice for Local Authorities” published by CIPFA, as amended or reissued from time to time8;
Signed by authority of the Secretary of State for Communities and Local Government
(This note is not part of the Regulations)