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3.—(1) Paragraph (2) applies in relation to a payment made to an approved body—
(a)which is accounted for in a return for an accounting period which begins on or before 31st March 2018 and is a qualifying contribution; but
(b)which, were it to be have been accounted for in a return for an accounting period which begins on or after 1st April 2018, by virtue of article 2 would not be a qualifying contribution.
(2) The payment ceases to be a qualifying contribution unless—
(a)the payment is spent by an approved body on or before 31st March 2020;
(b)the payment is retained by an approved body in order that it may be spent on the approved body’s residual costs, if the retention is approved by the regulatory body; or
(c)subject to paragraph (3), the payment is retained by an approved body in order that it may be spent on the approved body’s running costs which are not residual costs (“other running costs”).
(3) Where a payment is retained as described in paragraph (2)(c), the amount of that payment must not cause to be exceeded the proportion of the approved body’s running costs that, on a just and equitable basis, are attributable to that body carrying out its approved objects in England and Northern Ireland.
(4) For the purposes of paragraph (2)(a), in regulation 36(1) of LFTR 1996 (repayment of credit), reference to a qualifying contribution being spent or not spent includes the payment being spent or retained (or not spent or retained) as provided by paragraph (2).
(5) For the purposes of paragraph (2)(c), in regulation 33(8) of LFTR 1996 (paying running costs as an approved object) reference to “running costs” is to be treated as if it were a reference to “other running costs”.
(6) In paragraph (2)(c), “residual costs” means sums set aside by an approved body for its running costs (including contractual or statutory costs) where those are incidental to, or consequential on, the cessation of its operations.
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