Accounting for RMC

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  • SHill
    replied
    Sorry I had not seen your reply at #54 Thank you again for all your help getting me to this point.

    There is still a lot to sort out unfortunately.

    I will need to see the accounts to assess the financial position of the Company before I file the dormant accounts which will trigger the penalty.

    I am hoping the accountant won't start try to fight the previous Directors battles and obstruct further by not handing over the Company's financial information.

    I have sent him an email advising him of the new accountant's details who will be taking over.

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  • SHill
    replied
    I have been appointed Director of the RMC and the appointment is showing active on Companies House Website but the Accountant is still being difficult about handing over the accounts to me.

    1. I am trying to get copies of the last two years accounts from the previous Accountants and they won't hand them over unless I provide them with a copy of the minutes of the s. 305 meeting. A copy of the minutes were sent to the Company Registered address, do I need to send the Accountants (who are being disinstructed ) a copy?

    2. The Accountants were appointed by the Director who has been causing all the problems at the property.

    3. The previous Director, in breach of the s.24 Tribunal Order continues to refuse to handover the service charge information and accounts to the Tribunal Appointed Manager and the Accountant is continuing to assist in the obstruction.

    4. Can you advise on the process and protocol which the Accountants should follow for a handover to another firm.

    5. Is it their place to be questioning my appointment as Director if the Appointment shows as active on the Companies House Website.

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  • eagle2
    replied
    Congratulations on being appointed director, you are a fine example for others on here by succeeding through persistence.

    Unfortunately, the penalties are usually fixed, but if you speak to the breaches team, they will be able to confirm, You may need to seek recovery of the costs from the former directors and company secretary..

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  • SHill
    replied
    Advice on appealing late penalty fines at Companies House.

    Can you advise who I contact at Companies house to discuss the possibility of waiving the fines due to the circumstances being out of my control, and to which department I make the appeal.

    I am aware that as soon as I file the accounts at Companies House it will trigger the late penalty fine which I believe will be about £4,000 for the two years.

    The RMC is a dormant company hence no turnover and I believe the fine to be disproportionate for the type of Company.




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  • SHill
    replied
    In response to eagle2 advice about submitting a formal request for a general meeting s303 CA 2006 which I sent on 01.02.21 .




    1. A response was received on 04.02.21 from the Directors solicitor rejecting the Notice on the grounds it is frivolous or vexatious s.303(5). I had asked for the Directors to be removed.

    2. Now an email has been received late 17.02.21 from the Directors solicitor stating "My Clients have indicated that they wish to raise some issues and pass some resolutions so a General Members Meeting will be convened and I will serve notice of the same in the next day or so. This will be sent to the address of the flat". Already they are being deliberately vexatious because I am unable to get to the flat due to lockdown and to date the solicitor has been sending all his correspondence to an alternative address which he has on file, including the letter to reject the s.303 Notice. He knows perfectly well I would not be able to get to the flat.

    3. I would also suggest, using a solicitor to answer a leaseholders request for a meeting (s.303 Notice) to resolve the breach of a Tribunal order is unnecessary and any costs put to the RMC as a result should not be considered reasonable.

    4. The s303 Notice was sent on 01.02.21 so the 21 days timeline before I held a meeting would be 22.02.21.

    5. The list of resolutions I included:-
    1. "The Directors to provide the Tribunal Appointed Manager with the bank statements, consecutively from 21 December 2015 - to date for the following bank accounts and any other related bank accounts for the Company, within 10 days of this email dated 01 February 2021 or clarify at the meeting why this has not been actioned".

    6. This request has not been actioned and the 21 days to call the meeting will be up in 3 days. What do you suggest I should do about this? It will be a waste of everyone's time if the bank statements have not been handed over to enable the Appointed Manger to discuss the finalised starting balances of each leaseholders account. Should I agree that a meeting is to go ahead with no bank statements provided ?

    7. The Directors are only complying to hold a meeting to be seen to be doing the correct thing and acting reasonably. It is not clear what issues they want to raise or what resolutions they want to pass. I suspect it will besomething to intimidate me like large costs to the shareholders for alleged deficits on the service charge accounts. Which they will have to prove.

    8 Nothing will get resolved from the meeting because they will use their votes to out vote me. One director holds 50% of the votes and the other Director holds 25%.

    9. If the Directors are being asked to stand down and the director is also a shareholder, is it correct that they cannot vote in their own favour. Is this considered a conflict of interests?

    10. One Director who has 50% of the votes is 85 years old and was diagnosed with Alzheimers over two years ago. Would she be considered to be in right mind to vote? She is not fit to hold office and has had no involvement for the 16 years I have been at the property.

    11. If the Director with 50% of the vote and cannot vote in her own favour, then the other Director who has 25% to vote for her to remain in office and I have 25% of the vote requesting for her to stand down. As a Director does that give him the authority to decide?

    12. If the Director who has 50% of the votes but, has Alzheimers uses her votes to keep the other Director in, would this be considered a valid vote due to her condition? He could not vote for himself - conflict of interests so would my 25% of the vote be enough to vote him out? I need clarification of whether someone with alzheimers vote is valid

    13. The Directors are very tactical players and will have something up their sleeves to pull the rug from beneath me. The Directors will have their solicitor join the meeting and it will be me up against them! The Appointed Manager has not acknowledged the s.303 Notice so I am not sure if she would join but she is not very savvy in any event. She is a manager not a lawyer and she seems to no nothing about accounts.




    Any suggestions would be gratefully received. This situation I find myself in is leaseholder abuse and clearly not correct.




    -The Directors have breached a tribunal order to handover the bank accounts and management information

    - They have been misleading the Tribunal and the Appointed Manager on the management information and bank accounts for 9 months and passing blame onto the Managing Agent who is not party to the Order, claiming it is the Managing agent that is not cooperating so their hands are tied.,

    - The Tribunal had fallen for this excuse for 8 months which is unbelievable, it required me to provide information to refute the Directors misleading and deceitful statements and the Tribunal have now finally invited the appointed Manager to apply for further directions and a Penal Notice.

    -To try and resolve matters I have requested the Directors to set up a meeting (s.303 Notice)

    -The Directors who are suppose to be acting to promote the success of the company, employed a solicitor to reject the notice.

    - The Solicitor then, three days prior to the 21 day deadline says his clients wish to raise some issues and pass some resolutions so a General Members Meeting will be convened and he will serve notice of the same in the next day or so.

    - The Directors have also refused to acknowledge my s.21 & s.22 LTA 1985 Notices

    - The Directors are not avoiding conflicts of interest or exercising independent judgment. When a leaseholder calls a meeting it is rejected, but when they wish to raise some issues and pass some resolutions, a General Members meeting will be convened.

    - Any predictions what the will pull out of the bag at the meeting and how I should prepare myself?

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  • eagle2
    replied
    The accountancy charges are high and they are for odd amounts, is VAT included? Your quote was reasonable in total but the charge for filing dormant accounts was high, it takes about 15 minutes to file them online, they are a series of zeros. The manager's estimate is reasonable.

    I agree that it is important to establish that the directors are lending monies to the RMC and that the total exceeds the service charge arrears.

    To be fair, many RMCs do not explain service charge accounts as they should. I am not sympathising with this RMC but the Tribunal will have seen worse.

    The RMC's argument blaming the managing agent is invalid, it can insist that the agent acts as instructed, it can replace the agent, it can contact the bank directly etc. It will not get far making those arguments before a Judge.

    Although the RMC can destroy accounting records after 3 years, it would receive no sympathy if it does after you have made it aware of a claim against it. The claim still needs to be defended and it will be not be a valid excuse that it has destroyed the records and it is unable to respond.

    The law can definitely be tightened, there are regular offenders who come before the Courts and Tribunals and yet they are allowed to continue without any penalty.

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  • SHill
    replied
    In response to #46 "Your points regarding directors’ remuneration and the tax consequences would be valid if the RMC was making loans to the directors, but on the face of it at least, it looks like the directors are lending monies to the RMC."

    Having given the above some thought, is the RMC effectively not loaning the Directors money by allowing them to be in service charge arrears for over two years? They will also be in arrears for the most recent years but they have not provide accounts for me to evidence that. From the accounts as presented, which offers no explanation or details of any Director loans, it appears that the RMC has been loaning them the service charge monies for years. There is nothing in the Notes to detail Directors loans so until they evidence them it can only be surmised that there are no loans.

    There would be no reason not to be transparent unless they want to hide something and the Directors have gone to such lengths to breach a Tribunal Order. They have failed to hand over the bank accounts and service charge accounts. The Respondent has deliberately lied to both the Judge and the Appointed manager (in writing) claiming the Directors have not been able to get the previous Managing Agent to cooperate with the handover to enable them to comply with the order. They have failed to disclose that it is in fact the RMC that runs the bank accounts and the instruction with the accountant is with the Directors not the managing agent.

    The accounts have not been filed for 2018, 2019, 2020 (there has been no activity for the 2019 & 2020 accounts). The three years accounting records will be destroyed by the time anything gets to court and they will not have to provide anything.

    It has been an easy tactic to pass blame to a non party to frustrate the handover. The Managing Agent and Directors have been working as a team - hence allowing the Directors to not pay service charges for years.

    The law is clearly not robust enough for characters such as this.



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  • SHill
    replied
    Accountancy charges

    2018 £1,450
    2019 £1,520
    2020 Appointed Manager has put £750 plus VAT for 2020 with 3% increase allowed for 2020 in her draft budget

    I had an alternative quote obtained for my S.27A hearing from a Central London firm of Chartered Accountants for £500 + vat for service charge and £250+ vat to file the dormant Company accountants. If the repair and maintenance obligations of the lease are complied to there is such little expenditure required at the property. The landlord's obligations have been ignored for 16 years so there is now large expenditure to get on top of disrepair. The accountants are very simple.

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  • eagle2
    replied
    No, I cannot see any breaches within the accounts, the only criticism is that they are not as informative as they should be. Unfortunately, that is not unusual. Service charge accounts are very simple and they should be explained to readers.
    Why the directors are not paying service charges is a key question, Ideally you should inspect the bank statements to see if there are any signs of window dressing with large amounts being repaid shortly before the year end.
    The only reason to pay monies in protest is to protect yourself against cost orders and there are other ways. It is better to let the RMC take the action so that the burden of proof falls on them, especially on points where you are not entirely confident of success.
    There is usually no problem with directors having conflicts of interest as long as they disclose them.
    How much is the accountancy charge?
    Monies can be owed to the directors indefinitely, Their argument would be that if they did not lend the money, the RMC would need to borrow from a bank.

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  • SHill
    replied
    Thank you again

    1. Is there anything in the accounts as you see it, or how they are being prepared that breaches CA 2006 or RICS codes.
    2. I would of thought service charge accounts for a RMC should have to be very self explanatory.
    3. If the Director loans have no benefit to the Director personally why are they using them and not paying the service charges Quarterly in advance as demanded like everyone else.?
    I was refused maintenance for 3 years and was charged huge late payment fees because I challenged a service charge on my account which was the Directors own personal costs for 2014 mediation. I finally paid in protest and challenged at S.27a hearing and they were ordered to pay me back but I have still not got the money.
    I would definitely not pay in protest before challenging a service charge item through S.27a . This is what is advised but in my experience it was the wrong thing to do because I won’t get that money back and it appears that it had been quite easy for the Respondent to just point blank ignore the Order. It is too hard and too costly a process to enforce an order against an RMC.
    The Directors did not follow legal process to try and recover the alleged arrears but coercively controlled and victimised me for 3 years making my life a misery by withholding all maintenance until I paid the alleged arrears. This went on for three years. no lights, no cleaning, no heat, no fire risk etc in communal hall.
    4.The Directors are not avoiding conflicts of interest, they are obliged to wear two separate hats as Director and leaseholder,
    5. They are creating accounts that are far more complicated than necessary and increasing the accountancy fee as a result.
    6.I understood that Director loans have to be paid off by year end not to trigger a tax bill for the Company. Is this not correct? That is not happening if there is still a net balance of £3,668.
    7.The Directors loans are complicating matters and if they are not being used for “tax avoidance” then I am still not clear the reason why the Directors are using them, they would be paying service charges in advance like everyone else.
    8. The RMC Accounts should not be a vehicle for the Directors personal interests, tax planning or benefit in any way.

    I am much clearer about accounting thanks to all the help but still no clearer whether it would be considered reasonable for the RMC accounts to be so ambiguous and is there any statutory legislation in place so lessees are not having to guess?

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  • eagle2
    replied
    Your points regarding directors’ remuneration and the tax consequences would be valid if the RMC was making loans to the directors, but on the face of it at least, it looks like the directors are lending monies to the RMC.

    Leave a comment:


  • eagle2
    replied
    Surplus to be credited to lessees - if money is to be credited to the lessees is the figure without brackets?
    if there is an over spend would the same figure be in brackets?

    Yes
    The debtors are amounts actually invoiced, whereas the surplus is yet to be credited. So the £11,002 owing by the directors should be reduced by their share of the surplus.
    If there are £11,002 service charges due and, "other creditors" (maybe directors loan) is £14,670, does that mean if one amount is taken from the other and if "Other creditors" is a Directors loan, it is then £3,668 in credit at year end?
    Yes, that should be the net position at the year end.

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  • SHill
    replied
    Another question

    On the Notes to the Service Charge statement

    Surplus to be credited to lessees - if money is to be credited to the lessees is the figure without brackets?
    if there is an over spend would the same figure be in brackets?

    What I do not understand is how can there be Debtors "service charge due from tenants" £11,002. and Creditors amount falling due within one year "surplus to be credited to lessees" £4,580. Surely if there are service charges due, there would be no credits to lessees.

    If there are £11,002 service charges due and, "other creditors" (maybe directors loan) is £14,670, does that mean if one amount is taken from the other and if "Other creditors" is a Directors loan, it is then £3,668 in credit at year end?

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  • eagle2
    replied
    1 Yes, it certainly looks like the 2 directors have not paid service charges for approximately 2 years
    2 Current assets = assets which are already cash plus other assets which are expected to be converted into cash within 12 months (see #40) = 1,639 + 17,611 = 19,250.
    The assets appear in the order of liquidity. Cash is not considered to be a debtor, it is recorded separately.
    3 Creditors – there ought to be more explanation regarding the creditors especially if they include directors’ loans
    The other debtors of £6,609 appears to be the only reason for the RMC to borrow money. You could be right, it could relate to the insurance and if it is paid in say 2020 for 2021, the RMC would need to borrow monies until the service charges were collected in 2021.
    4 There is no problem as long as the directors’ loans exceed their service charge debts. If the loans were repaid first, they would be effectively lending monies to themselves.
    5 Depending on the terms of the lease, surpluses would normally be credited to the leaseholders when the accounts are completed in order to be offset against the following year’s charges.
    6 The heading “other debtors” is unusual as explained at #12 and you should enquire further. I am assuming that you are right and that it relates to insurance. If it is, then the £5,589 would be included within expenditure for the current year.
    7 The accounts do not record any loans to directors subject to further details of “other debtors” and subject to confirmation that loans from directors are included within creditors and those loans exceed their service charge debts.
    If loans have not been recorded within the books, they would be difficult to trace other than by examining carefully all the items on the bank statements and checking them with the accounting records.
    There is nothing wrong in directors lending monies to the RMC and drawing those monies out at any time. There would be no tax payable unless interest was being added to the loans and that would appear under expenditure.
    A dividend would stand out and would appear under expenditure.
    Invoices supplied by a director’s company could only be identified by inspecting the documents.
    8 There is nothing obviously wrong with the accounts, you just need more information about “other debtors” and “creditors”.
    9 If “other debtors” relates to insurance, it would be a proportion of the total insurance premium
    If the directors have lent money to the RMC, no agreement with other members or creditors is necessary. The directors are entitled to withdraw their own monies at any time subject to para 4 above
    The directors should disclose any balance on their loan accounts and the note regarding transactions with related parties should mention the loans.

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  • SHill
    replied
    sorry typo at point 3

    14,670 not (14,670)

    3. Creditors amounts falling due within one year on the notes to the service charge statement is made up of (maybe Directors Loans ) 14,670 and surpluses to be credited to lessees 4,580 (previous year credit 2,436.) 19250

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