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This article is explicitly designed to aid Resident Management Company (RMC) directors in complying with the provisions of both the companies act 2006, The landlord and tenants act 1985 (sections 21 and 21A) and the Commonhold and Leasehold reform act 2002 (section 152) when producing year end accounts.

RMC’s, or indeed any company owned or operated by director leaseholders (including right to manage and right to enfranchise companies) need to fulfil the above obligations and these are covered in greater detail in an article elsewhere on this website here

  1. Ensure your service charge year and company accounting year align

This isn’t always the case as, for example a right to manage company may be formed in the middle of a service charge accounting year. This is easily remedied by applying to Companies House to change your accounting year by either extending or reducing a financial year such that the dates align with the service charge year. This then ensures that the same accounting data is used and the accounts can then be merged into a single set of accounts that fulfils all required legislation.

  1. Run your RMC as a dormant entity

As long as your Residents Company doesn’t have income (beware, ground rent is income) then you can run it as a dormant (non-trading company) and submit either:

  1. Dormant accounts
  2. Almost empty accounts with the cost of the freehold and the closing bank balances, but no profit and loss items

Service charges are classified as “monies held in trust” and not “income”, hence the ability to run Residents Companies as non-trading entities.

You will still need to produce service charge accounts but it can often be cheaper operating your Residents Company in this way.




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