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  • Macromia
    replied
    Originally posted by mesne lord View Post
    There is no sinking fund, the FH/MA spent it when they acquired the freehold.

    I am thinking is there any legal process that can force the FH to actually pay money to the service charge fund, probably not.
    Are you saying that there was a sinking fund and the FH/MA spent all of it as soon as the FH acquired the freehold and employed the MA?

    What did they spend it on?
    All spending needs to comply with the terms of the lease and should be properly supported with appropriate invoices.


    I completely agree with what others have said though, certification by accountants is a complete waste of leaseholders money.
    The current MA at my block includes a charge of £780 each year for 'accountancy', including certification, when no certification of any sort is required by the lease and it takes me little more than 30 minutes each year to confirm whether all items on the service charge account match the amounts on the invoices, are allowable according to the terms of the lease, and are split in the correct proportions (once I have managed to get copies of the invoices).

    Even allowing for the fact that the accountants have to look at the amounts received from each leaseholders, they are getting an extremely good hourly rate (1.5 hours work in total I.M.O. - and that allows for a 15 minute paid coffee break!).


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  • eagle2
    replied
    The FH collects all SC contributions including his own. If he does not pay he will have insufficient funds and he will have difficulty collecting arrears.

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  • mesne lord
    replied
    There is no sinking fund, the FH/MA spent it when they acquired the freehold.

    I am thinking is there any legal process that can force the FH to actually pay money to the service charge fund, probably not.

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  • eagle2
    replied
    paulamis - an IOU from a FH can be worthless in which case the LH would have lost his contributions. I have come across mysterious loans going out at the beginning of a year and repaid before the year end without any mention at all in an accountants report.

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  • paulamis
    replied
    I would put it this way, "garbage in - certified garbage out".

    Is there a reserve/sinking fund involved to muddy the waters here?

    If there is this can be effectively an interest free loan to the FH to cover their costs, if some works were needed that needed all of the reserve they would have to pay it back, But there is no rule to say the reserve must be fully depleted before the MA calls on you for more money, because in his professional judgement he believes X thousand should be held ...

    While all this is galling, you have not actually lost anything, you have exchanged your money for a share of the reserve fund assets, those assets could just happen to include a big IOU from the FH.

    You might think, is not my money held in trust, they cannot take my money and spend it on the FH (or other LH) costs, but if you check carefully, the reserve is in trust as a whole, a MA cannot take money from one property and spend it on another, but within a property they can do whatever they like.

    Obviously this is like a ponzi scheme, it will not work without funds coming in at the bottom, ah, the sinking fund!




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  • eagle2
    replied
    The accountancy service adds no value at all, errors are missed and even the FTT does not rely on an accountants report. It is much better to inspect the accounting records yourself.

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  • andydd
    replied
    Originally posted by paulamis View Post
    Are you sure you want the 'service', you pay hundreds of pounds for an accountant to take the agents figures and add them up again.

    It does little to help you work out what is going on.
    Exactly.. My FH charges for a accountant..but the lease makes no mention of it..it was bought up in my first LVT claim but with confusing results...as mentioned above it does little to help the LH..my account listing from my FH has supposedly been audited its full of errors, amounts appear then disappear...its a right bloody mess.

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  • eagle2
    replied
    If you are a member of a management company check the Articles, sometimes they give you the right to inspect the accounting records. If they do you can bypass the s22 route and make the request to inspect the records in accordance with the Articles instead.

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  • eagle2
    replied
    s21 does not help you at all. You should ask to inspect the accounting records. Only if you are refused access to them should you issue a s21 notice so that you can then issue a s22 notice to inspect the supporting documents. The bank statements will give you the information you seek.

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  • leaseholder64
    replied
    The information provided will tell you how much was billed to the person in question. It just wouldn't tell you how much he paid.

    If he is not paying, and you he won't be able to cover the costs, or you will be able to see that your service charge exceeds your share of the costs.

    In practice, an accountant following ICAEW TECH 03/11, will also create a balance sheet, and if someone is not paying, that will show an excess figure in Debtors, although the effects of accrual accounting done properly, can also create debts against pre-payments to suppliers, but these will be fairly static from year to year.

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  • mesne lord
    replied
    Thanks for all the replies.

    This is what it's about.

    The freeholder owns one flat direct and I suspect he doesn't contribute his share to the service charge fund.

    An independent accountant would be able to verify this. Also, do all the leaseholders pay equally as the lease says they should.

    If leaseholder64 is correct (costs only not income) then s21 would not help.

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  • paulamis
    replied
    Are you sure you want the 'service', you pay hundreds of pounds for an accountant to take the agents figures and add them up again.

    It does little to help you work out what is going on.

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  • Gordon999
    replied
    Here is the explanation : too many versions of S21

    https://www.servicechargedisputeguid...e-information/

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  • eagle2
    replied
    The Data Protection Act 2018 exists. A s21 summary of relevant costs includes charges which have been paid so the s22 documents must include bank statements.

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  • leaseholder64
    replied
    The Data Protection Act no longer exists.

    Section 21 only requires a summary of costs (i.e. not of income). (Although it refers to demands for service charges, these are the invoiced figures, and don't reveal anything about what was received. They would normally deducible from the terms of the lease.)

    Section 22 only requires documents to support the summary from section 21.

    I'd therefore say there is no requirement to provide details of (cash basis) income, or lack thereof, and it is generally only income that would be personal information.

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