Accounting Costs for Service Charge Accounts

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    Accounting Costs for Service Charge Accounts

    The limited company, that owns the freehold of the block and deals with the service charges through an instructed agent, has the same accountant prepare the service charge accounts and the company's own accounts.

    The service charge accounts deal with the service charges on a 25 year old block of 11 apartments.

    The limited company accounts deal with the income from ground rent, calculating the balance sheet, submission of statutory accounts to Companies House, (presumably) a Corporation Tax calculation and its submission to HMRC.

    There is a difficulty in that the accountant issues just one invoice for both services combined. While the cost of the service charge accounts can be reclaimed through the service charge, the work for the limited company is the sole responsibility of the limited company.

    Not all the leaseholders are shareholders in the limited company.

    Does anyone have a feel for costs for each service - ie the split between the 2 elements please?

    Thanks in anticipation

    #2
    What is the limited company's annual income from the annual ground rents ?

    If the accountant's cost is split 50 : 50 between company expense and service charge audit expense , is the annual ground rent income sufficient to cover the company's annual expense ?

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      #3
      The simplest way is to ask the accountant to split the charge. Normally the cost of preparing service charge accounts would be considerably more than the cost of producing statutory accounts because there would be more transactions included in the former. To obtain a better indication, I suggest that you estimate the number of transactions in each. .

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        #4
        Gordon, the limited company only collects the ground rent from the leaseholders who are not shareholders in the company so the company costs are often higher than the income.

        Eagle, thanks noted.

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