Time period within which first AGM should be called

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    #16
    Originally posted by Gordon999 View Post
    1Does wording in your lease say the service charge account has to pay for a concierge ?
    This is why it is bad to start multiple thread on the same subject. I seem to remember that the original thread says the lease gives power to appoint caretakers, etc., but doesn't require they be appointed. As I recall it, it was a blanket enabling clause allowing expenditure on all sorts of services.

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      #17
      Is this not the Company which has appointed 7 new directors so the new directors can outvote the old ones?

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        #18
        Hi Gordon,

        Thanks again for reply to each question. There are 87 flats with an annual budget of £107K. When the new managing agent was appointed by old directors they approved the budget of £107K for the year 2018 with new managing agent. That budget was not including this concierge cost

        Our old managing agent provided caretaker within the same budget who does all cleaning, gardening and onsite caretaker job within the cost of the same service charge of £107K.

        One leaseholder even raised this question with the managing agent
        "I do not recollect that there was a vote for the "concierge service". This proposal is not included in our 2018 budget that has now been fixed. Indeed, we have already paid the first instalment. Therefore there is no funding for this service, and cannot be so until the 2019 budget."

        The managing agent replied to him
        "Just by way of clarification, a vote is not required where the Lease is explicit." I am pasting the clause from our lease for your reference

        "For the purpose of performing the covenants on the part of the Lessors herein contained at their discretion to employ on such terms and conditions as the Lessors shall think fit one or more caretakers porters maintenance staff gardeners cleaners or such other persons as the Lessors may from time to time in their absolute discretion consider necessary"

        The managing agent and old directors appointed concierge at £24,000/annum. The old directors signed concierge contract between our RTM company and person employed as a concierge. Directors confirmed that they didn't mention any termination clause in this contract which was for "fixed one year less one day". I suspect that they did this so that it will be difficult for new directors to terminate his contract before one year. The managing agent told leaseholder that cost for this concierge will be covered by the saving in insurance.
        Directors noted Concierge is getting pay from our RTM bank account of approx £2100/month (depending on days in the month) without deducting any PAYE. Directors also noticed the concierge is getting pay in his personal bank account even when he is working as a contractor. I also work as a contractor but all my payment comes in the business account so I am not sure how concierge working as a contractor can get payment in his personal account.

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          #19
          The one year less a day is to avoid creating a long term qualifying agreement. Anyone taking on a jobs sufficiently full time to get paid that much is not going to want a contract that can be cancelled at short notice. All that part seem sensible, except in a as much as there is some sort of moral, but not legal, obligation, to consult for a such a large service contract.

          I see no way in which the board has exceeded its powers in appointing them.

          It does, however, feel like this will result in a ruling of contract of service (employment) for both HMRC and employee rights, so, on the former, maybe someone should tell HMRC. I suspect quite a few landlords don't have business bank accounts, so I'm not sure that the personal bank account is an issue, except, possibly for the bank.

          What provision does the concierge make to cover his sickness and holidays? If he covers those, it would slightly shift towards a contract for services, but he doesn't seem t have a choice of place and times of work, which favours contract of service.

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            #20
            Normally when a RTM company appoints a Managing Agent to administer the service charge account, all the "service providers" are managed by the managing agent who has to perform to the standard in the RICS Residential Management Code.

            I worked out that £24000 divided by 87 flats = £286 per flat . There should have been competitive quotations from 3 different prospective suppliers and the leaseholders should have been consulted before the contract was awarded. ( its required in the RICS Code if the cost exceeds £250 per flat ).

            It seems the old directors have gone out of the way to place this contract and it may be an offence under the Fraud Act 2006 Part 4 ( Fraud by abuse of position ).

            What does the service contract say about the time required as concierge to the RTM ?

            If the RTM is the sole client, HMRC may not see this is a genuine service contract but you probably know more about how HMRC views a service contract where the contractor works for a single customer.

            .

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              #21
              The £250 only applies to qualifying works. Being a concierge is not works. It, potentially comes under qualifying long term agreements, except that is for not more than a year. If it had been more than a year, the limit would have been £100 a year. The figure 250 appears nowhere in the 3rd edition of the RICS guide. The nearest is the phrase "statutory limit".

              Service contract is not well defined. For tax purposes there are:

              contract of service: this is employment, and at least the PAYE initial checks must be performed; in this case there would be no doubt that PAYE applied for such a contract, as the single employment takes them above the tax threshold; and

              contract for services: this is the self employed case.

              HMRC have an online questionnaire that people can rely on to decide which applies, but it sounds to me as though:

              the person is not taking business risks;
              they don't choose when and where they work;
              there is doubt as to whether they are responsible for arranging cover for their absences,

              which suggests to me that it is a contract of service.

              Most contracts of service have no more than 3 month notice periods, so the question of whether they can be qualifying long term agreements is normally academic.

              What we are not hearing is the other side of this, namely why they think a concierge is necessary. It's also not entirely clear, to me, what the real difference is between a concierge and a caretaker.

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                #22
                The RTM should contact HMRC to enquire if PAYE should be applied, otherwise there is a risk that it could become responsible for any unpaid PAYE. There is no requirement for contractors to have separate business bank accounts but most choose to do so in order that they can separate their business affairs. Otherwise if the HMRC were to investigate their business accounts, they would be required to produce their private bank account statements.

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