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help with setting up service charge management company
converting to flat management / freehold company
Firstly, a sincere thank you for your help so far in taking on TinyTax as our means of submitting EOY accounts .
I have taken the liberty of attaching a copy of our accounts for 24/25 and would be really grateful if you could advise how these would need to be changed to meet the requirements of your flat management solution. also, am i right in assuming this would require two bank accounts - one for the trust and the other for the management.
Many thanks and kind regards
Ken
Firstly, a sincere thank you for your help so far in taking on TinyTax as our means of submitting EOY accounts .
I have taken the liberty of attaching a copy of our accounts for 24/25 and would be really grateful if you could advise how these would need to be changed to meet the requirements of your flat management solution. also, am i right in assuming this would require two bank accounts - one for the trust and the other for the management.
Many thanks and kind regards
Ken
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The key thing with a flat management / freehold company is that the service charge money you collect from leaseholders is held on trust (under section 42 of the Landlord and Tenant Act 1987). It is not the company's own income and it does not go through the company's own statutory accounts as turnover, so your Companies House accounts only report what genuinely belongs to the company — which for most flat management companies is very little.
On your two questions:
Two bank accounts — yes, the recognised practice is to keep the service charge fund completely separate from any money that belongs to the company itself. In practice that usually means a separate service charge / trust account kept apart from the company's own account (if it needs one at all). The service charge fund is accounted for separately for the leaseholders and does not appear in the company's own accounts. Whether your particular company needs a specific account structure depends on your lease terms, so that part is one to confirm with your accountant — but keeping trust money separate from company money is the standard expectation.
How your accounts would change to file through TinyTax — the company's own balance sheet is usually short: share capital (often £1 per flat, or £0 if the company is limited by guarantee), the freehold itself if the company owns and recognises it, only the cash that belongs to the company (not the service charge account), and the company's own creditors/debtors. Unspent service charge money and any reserve or sinking fund are trust balances and stay out of the company's accounts. Most flat management companies with no activity of their own file as Dormant plus Accounts only; if the company has its own income (ground rent, or more than a small amount of bank interest) you would file as Trading instead.
I can't review and redraft your attached accounts for you — how to present your specific figures is something your accountant should confirm — but our full walkthrough covers exactly what belongs on the company's own balance sheet and how to set the filing options:
https://tinytax.co.uk/support/flat-management-freehold-companies
Hope that helps point you in the right direction.