67Adjustment of contributions to outgoings

67 Adjustment of contributions to outgoings (1) If a lease requires the tenant to contribute to outgoings, the lease must include a provision to the effect that, within 3 months after the end of each period for which the tenant contributes to outgoings under the lease (the payment period), there must be an adjustment between the lessor and the tenant to take account of an underpayment or overpayment (if any) by the tenant in relation to the outgoings. (2) The lease must also provide that the adjustment is the difference between— (a) the amount paid by the tenant for the estimated expenditure by the lessor on outgoings during the payment period; and (b) the amount spent by the lessor for recoverable outgoings during the payment period to the extent that the lessor properly and reasonably incurred the expenditure. (3) In subsection (2) (b): amount spent—if a lessor is using an accrual method of accounting, the amount spent by a lessor during a period includes a debt accrued by the lessor during the period.