Dormant Company carrying out County Court Proceedings

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    Dormant Company carrying out County Court Proceedings

    Hi,

    I am seeking advice over an RMC that files dormant accounts at Companies House, at the same time as starting County Court proceedings in the name of the company to recover not only service charge arrears but grossly inflated legal costs.

    Can the company just act as a conduit to pass this money to third parties?

    Any advice offered would be much appreciated.

    #2
    If you think your service charge demand is unfair, you can make an application to the FTT ( First Tier Tribunal ) for a determination .

    You can get information on FTT by downloading a free guide from LEASE ( www.lease-advice.org )

    Comment


      #3
      The answer is unfortunately yes. If the lease states that monies are payable to the RMC, only the RMC can issue County Court proceedings even if it cannot benefit from the legal action. It is quite common for solicitors and managing agents to include large sums for their own benefit. As Gordon999 states, you can challenge the service charges (and the administration charges) by making an application to the FTT (or asking the court to refer claims to the FTT).

      Comment


        #4
        A dormant company should not be confused with a non-trading company. If a company has signifcant accounting transactions it is not dormant for Companies House purposes even if those transactions go through a third party. Collecting service charge payments and paying money out to contractors are signifcant accounting transactions.

        Comment


          #5
          Until the accounting authorities state otherwise, the general consensus is that an RMC is regarded as dormant, files dormant accounts with Companies House and issues separate service charge accounts.

          Comment


            #6
            Originally posted by eagle2 View Post
            Until the accounting authorities state otherwise, the general consensus is that an RMC is regarded as dormant, files dormant accounts with Companies House and issues separate service charge accounts.
            Hi, Thank you for the responses firstly.

            However I was of the understanding that it was dependent on if the RMC acted as Principal or Agent if dormant accounts should be filed

            How you determine if the RMC is acting as Principal or Agent is another question?.

            Comment


              #7
              That is the problem, the experts do not seem to be able to agree, the debate continues.

              The accounting authorities have stated that trust monies do not belong to the RMC and appear to have left it at that for the time being.

              The general consensus seems to be that you cannot include some but not all transactions, so general practice is to issue dormant accounts with Companies House and separate service charge accounts to leaseholders.

              Comment


                #8
                Originally posted by eagle2 View Post
                The accounting authorities have stated that trust monies do not belong to the RMC and appear to have left it at that for the time being.
                Hi thanks again for the reply.

                The issue here though is that County Court proceedings have been issued in the name of the RMC, to recover not only alleged arrears but also legal costs, etc, however these are not allowed for in the lease so are not legitimately trust monies.

                Can these just pass through the RMC without being correctly accounted for?

                Comment


                  #9
                  The RMC is the legal entity with power to demand payment of service charge from the leaseholder. The RMC has to hold the service charge money ( which belongs to the leaseholders ) in a separate bank account ( labelled "client account" .). If the RMC has no income from ground rent, it can return dormant annual accounts to Companies House.

                  http://www.legislation.gov.uk/uksi/2...0160518_en.pdf

                  If the service charge contribution is not paid on the due date and the leaseholder is treated as falling into arrears , the RMC probably consults a solicitor on how to claim the service charge arrears and adds the solicitor's bill to the arrears owed by the leaseholder.

                  So if the RMC has been advised to recover the arrears in the County Court and starts this claim , the leaseholder can respond to the County Court claim by pointing out the total demand figure is not correct and start an application to the FTT for judgement on the fairness of the service charge demand,

                  Comment


                    #10
                    The consensus here is that an RMC cannot be a dormant company for Companies House purposes.

                    If a company is suing it is difficult to see how it can be dormant.

                    The transactions a dormant comapny is allowed to undertake are very limited indeed see here and here

                    Comment


                      #11
                      [QUOTE=Lawcruncher;n1042748]
                      If a company is suing it is difficult to see how it can be dormant.
                      /QUOTE]

                      Hi Lawcruncher,

                      Thank you for your integrity, far too many on here continually making excuses for the incorrect actions of either freeholders or managing agents.

                      I also can't see that the RMC can file dormant accounts whilst suing in the name of the company.

                      Gordon continues on about the service charge demand, but here we have administration charges on top of the alleged arrears.

                      Of course the FTT can make the decision that the arrears are correct and payable and also make the decision that the administration charges are not payable under the terms of the lease. Who then pays the legal costs?

                      Comment


                        #12
                        Tech 03/11 states “The treatment of transactions relating to service charges in the RMC’s …. statutory accounts … is subject to debate”. It goes on “Separate guidance … will be issued when the underlying principles have been agreed.” In 2012, the ICAEW’s position was “We know what accounting treatment should be followed if you are an agent or a principal, the key to cracking this is to get clarity on the context in which these companies are acting”. 6 years on, there seems to be no agreement, meanwhile most RMC’s seem to be filing dormant accounts.

                        Comment


                          #13
                          The answer to the question is if the RMC succeeds, the costs are payable to 3rd parties and the RMC does not benefit. If it fails, the RMC is responsible for the costs, it will have a deficit and it will have to look to its members to bail it out. It is totally unreasonable, some people are using RMC’s and the trust monies to finance litigation for their own benefit.

                          Comment


                            #14
                            Originally posted by Lawcruncher View Post
                            The consensus here is that an RMC cannot be a dormant company for Companies House purposes.

                            If a company is suing it is difficult to see how it can be dormant.

                            The transactions a dormant comapny is allowed to undertake are very limited indeed see here and here
                            I do not disagree with you but the argument against is that the RMC is acting as agent and any accounting entries relate to the trust fund and not to the Company itself. One day, the experts may reach agreement.

                            Comment


                              #15
                              The definition of "dormant company" is set out by Companies House (CH) as a company having "no significant transaction" during the year and "no significant transaction" includes :

                              (1) annual filing fees paid to CH
                              (2) fines for late filing to CH
                              (3) payments for issue of new shares :

                              Comment

                              Latest Activity

                              Collapse

                              • Reply to Dissolve company and regain shares
                                by ram
                                As above post number 2

                                The Limited company owns the building, and the flats. ( R.M.C )
                                The leaseholdrs become members of the Ltd company and shares are issued to each flat ( one share per flat )
                                They then have a share in the company that owns the freehold ( they are not freeholders,
                                ...
                                22-09-2021, 21:22 PM
                              • Dissolve company and regain shares
                                by LaraJara21
                                Good afternoon

                                I am the director of a small a residents management company / limited company and We want to dissolve the limited company so each freeholder can regain their own shares. I would be extremely grateful if someone could advise on if this is possible and if so, how do we that?...
                                22-09-2021, 11:35 AM
                              • Negotiating a lease extension
                                by LizLease
                                Hi all, I am new to the forum.
                                I am looking to extend the lease on a flat (currently under 70 years).
                                I received a quote from the freeholder and a valuation from a surveyor (£3k lower than the freeholder's figure).
                                I spoke to the leasehold Advisory Service who said to ask the surveyor...
                                21-01-2021, 12:44 PM
                              • Reply to Negotiating a lease extension
                                by sgclacy
                                If you were to challenge the costs afterwards, almost certainly it would be dealt with as a paper review and is not as daunting as it might seem . The Tribunal generally think that around £350 plus VAT for dealing with the Section 42 Notice of claim and circa £1000 plus vat for the deed of surrender...
                                22-09-2021, 13:38 PM
                              • Renewing the lease and sublet charges
                                by mpppen
                                I've just about finished the tortuous process of renewing the lease at a flat we own bringing it up to 170 years and no ground rent (yay).

                                It is rent out and I do keep getting sublet registration demands from an infamous mgm company on here.

                                I've read back through the forums...
                                21-09-2021, 18:47 PM
                              • Reply to Renewing the lease and sublet charges
                                by Gordon999
                                I have some faint recollection that a complaint of " in-house legal team" was raised before a LVT or FTT Tribunal and Chairman decided "in-house team" did not qualify as "solicitor", who are required to conduct CDD ( Client Due Diligence ) before taking...
                                22-09-2021, 12:28 PM
                              • Example "Deed of Variation" for extending the lease term.
                                by Lat
                                I have tried google but there is very little to show. Does anyone have a redacted example of a "Deed of Variation" that they have had to sign?

                                The criteria in my case is...

                                1. Shared Freehold flat in block of flats
                                2. Freeholder is Residents Company Ltd with...
                                04-09-2021, 11:24 AM
                              • Reply to Example "Deed of Variation" for extending the lease term.
                                by Lat
                                What is wrong with the following process to register the "Deed of Varation"

                                All that is required of me is to get the "Deed of Variation" registered with the Land Registry and provide a copy of the new lease to the Company Secretary.

                                The Process.
                                1....
                                22-09-2021, 12:16 PM
                              • Reply to Dissolve company and regain shares
                                by Gordon999
                                The RMC has legal rights under the lease to administer the service charge account and demand annual service charge contribution from leaseholders. . It should not be dissolved because it holds the freehold title of the building.

                                If you transfer the freehold title to the leaseholders,...
                                22-09-2021, 12:05 PM
                              • Right to Manage Costs
                                by Pariah81
                                Hi,

                                I am part of a residents association that is exploring right to manage (RTM).

                                We are a 30 flat block in the Ealing area.

                                We want to get advice on the process so how much should we be expecting to pay for our legals?

                                I'm also aware we have to pay...
                                21-09-2021, 13:48 PM
                              Working...
                              X