22.3.1 During the Service Period, any amount to be set off should generally be applied against the next payment of the Unitary Charge (or other payments) due after the amount owed by the Contractor has fallen due and payable (unless the Contractor has already paid the Authority the relevant amount).
Suitable drafting is as follows:
22.3 Set-off
(a) The Contractor shall not be entitled to set off any amount due to the Authority by it, but the Authority may (subject to clause 24.4 (Set-off on Termination) and [Section 19.5.10 (Enforcement)]) set off any amount owed to it by the Contractor under this Contract which has fallen due and payable1 against any amount due to the Contractor under this Contract.2
(b) If any amount to be set off by the Authority pursuant to paragraph (a) above is disputed3 then any undisputed element of that amount shall be set off and the disputed element shall be dealt with in accordance with Clause 34 (Dispute Resolution).
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1 This must be by definition an ascertained amount.
2 The right to set off here is subject to the restriction in Clause 24.4 (Set-off on Termination).
3 For changes in law relating to VAT that quality for compensation see Section 16.8.2 (Changes in VAT Scope).