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Flats Mgt Co Ltd by Guarrantee + all directors own Freehold
We are a small building of 5 flats (it was a house and converted in 2001). Each flat is now owned by a director. The PSC owns 2 flats, his father owns 1 flat, and the two other flats are now owned by two different directors respectively. So that is 4 directors.
The freehold is owned by the mgt company and charges no ground rent. This is because at one time the freehold belonged to the PSC and his brother and they let the flats, except for the one owned by the parents. The brothers transferred the freehold to the mgt company as a condition for the sale of the two flats by one of the brothers to the 2 non-family directors.
Upon our first filing CH and HMRC considered us dormant. That was from our incorporation in Aug 2023 to Aug 2024. We had no bank account and it took some time to find one!
We then applied to change out acct year to the calendar year. Now there is notice in our CH dashboard to file accts for 1 Sep-31 Dec 2024, and 1 Jan-31 Dec 2025. The 2024 period has no financial activity. Bank account opened in Jan 2025 and we then began contributing an agreed monthly service charge. We are not collecting in trust for anyone. We simply contribute to our 'sinking' fund to meet monthly expenses. EG, the freehold insurance premiums, electric for common area, and an annual communal garden fee.
So do we now file income/expense sheets? Are we still dormant in 2025 or are we a micro entity? What happens if we contribute more to save for roof works? I am very confused. Again we own the freehold, all flats are owned by directors. We are limited by guarantee, so no shares. Help please? Thanks in advance., cheers.
The freehold is owned by the mgt company and charges no ground rent. This is because at one time the freehold belonged to the PSC and his brother and they let the flats, except for the one owned by the parents. The brothers transferred the freehold to the mgt company as a condition for the sale of the two flats by one of the brothers to the 2 non-family directors.
Upon our first filing CH and HMRC considered us dormant. That was from our incorporation in Aug 2023 to Aug 2024. We had no bank account and it took some time to find one!
We then applied to change out acct year to the calendar year. Now there is notice in our CH dashboard to file accts for 1 Sep-31 Dec 2024, and 1 Jan-31 Dec 2025. The 2024 period has no financial activity. Bank account opened in Jan 2025 and we then began contributing an agreed monthly service charge. We are not collecting in trust for anyone. We simply contribute to our 'sinking' fund to meet monthly expenses. EG, the freehold insurance premiums, electric for common area, and an annual communal garden fee.
So do we now file income/expense sheets? Are we still dormant in 2025 or are we a micro entity? What happens if we contribute more to save for roof works? I am very confused. Again we own the freehold, all flats are owned by directors. We are limited by guarantee, so no shares. Help please? Thanks in advance., cheers.
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The key principle: service charge money — including a sinking/reserve fund you're building up for future works like the roof — is held on trust for the leaseholders. It is not the company's own income, however much accumulates in the account, so it should never be entered as turnover in the company's own Companies House accounts. This applies whether it's covering routine running costs (insurance, electricity, garden fee) or being saved for a bigger job later. You wouldn't produce an income/expense sheet for that money as part of the company's statutory accounts — it's kept in a separate service charge account for the leaseholders.
Once that trust money is set aside, a flat management company with no income of its own often has little or nothing left to report, and can continue filing as dormant. From what you've described — a company that owns the freehold but charges no ground rent, and simply collects and holds service charge/sinking fund contributions — that sounds like it may still be dormant for the 1 Jan–31 Dec 2025 period, on the same basis as the earlier one.
Two things that would change that, worth checking against your own facts:
- Does the company's own bank account earn any interest in the company's name? Interest earned by the company itself (as distinct from within the ring-fenced service charge account) is the company's own income and would make it non-dormant for that period.
- Is any money coming in genuinely the company's own, rather than leaseholder service charge contributions?
If it remains dormant, the filing is: a dormant CT600 (only if HMRC has issued a Notice to Deliver) plus either AA02 dormant accounts, or simple micro-entity accounts if there's a small balance to show (e.g. the sinking fund cash sitting in the company's bank account at year end, even though it isn't the company's income). As a company limited by guarantee this is fully supported through TinyTax either way.
Full walkthrough, including what goes on the balance sheet and how to select the right options on the form: /support/flat-management-freehold-companies
Whether dormant or micro-entity status applies exactly to your situation does depend on your own facts and the terms of your lease, so it's worth a quick check with an accountant if you're unsure — happy to help with the filing itself once you've confirmed which applies.