PART 1FINANCIAL ADMINISTRATION
Credit arrangements
17“Credit arrangements”
1
For the purposes of this Part, a council shall be taken to have entered into a credit arrangement where—
a
it enters into a transaction which gives rise to a liability on its part, and
b
the liability is a qualifying liability.
2
A transaction entered into by a council is to be taken for the purposes of subsection (1) as giving rise to a liability on the part of the council if—
a
it falls in accordance with proper practices to be treated for the purposes of the council’s accounts as giving rise to such a liability, or
b
it falls in accordance with regulations to be treated as falling within paragraph (a).
3
The reference in subsection (1)(b) to a qualifying liability is to any liability other than—
a
a liability to repay money,
b
a liability in respect of which the date for performance is less than 12 months after the date on which the transaction giving rise to the liability is entered into, and
c
a prescribed liability.
18Control of credit arrangements
1
A council may not enter into, or vary, a credit arrangement if doing so would result in a breach of—
a
the limit determined by it under section 13, or
b
any limit applicable to it under section 14.
2
In applying those limits for the purposes of subsection (1)—
a
entry into a credit arrangement shall be treated as the borrowing of an amount of money equal to the cost of the arrangement, and
b
variation of a credit arrangement shall be treated as the borrowing of an amount of money equal to the cost of the variation.
3
Regulations may make provision about the calculation for the purposes of subsection (2) of the cost of a credit arrangement or a variation and, in particular, about the treatment of options.