Accounting for RMC

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  • SHill
    replied
    .... You won't understand above because all figures have moved around.

    Service Charge Balance sheet
    Current assets
    Cash at bank 1,639
    Debtors - 17,611
    19,250
    Creditors; amounts falling due within one year -
    (19,250 )

    Notes to service charge statements

    Debtors
    Service charge due from tenants 11,002.
    Other debtors 6,609
    17,611

    Creditors; amounts falling due within one year
    Other creditors 14,670
    surplus to be credited to lessees 4,580
    19,250

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  • SHill
    replied
    Can someone help me understand the balance sheet and notes to service charge statements because none of the figures below relate to the actual service charge expenditure. Just trying to ascertain why there would be debtors or creditors for a very simple service charge account that collects service charge in advance for a very small building and the repair and maintenance obligations of the lease are in breach by 16 years. A s.27A LTA 1985 showed no payments for services were outstanding.

    The Directors submit the figures to the accountant so just trying to understand what is going on and any possible misconduct.

    Service Charge Balance sheet

    Current assets
    Cash in bank. 1,639 (this is clear) previous year 605
    Debtors - 17,611 12,547. (If a debtor is someone who owes money to a creditor could this be money owed to a
    19,250 13,152. Directors Loan ) All service charge money are collected in advance .


    Creditors; amounts falling due within one year -
    (19,250 ) previous year (13,152)


    Notes to service charge statements

    Debtors

    Service charge due from tenants 11,002. previous year 6,958 (This would means the Directors have paid no service charges

    Other debtors 6,609. 5,589. The S.27A hearing showed there were no invoices unpaid. What else might be
    17,611 under "Other debtors". Is a Directors Loan a creditor or a debtor.

    Creditors; amounts falling due within one year

    Other creditors 14,670
    surplus to be credited to lessees 4,580
    19,250

    Completely confused to what is a debtor or a creditor is. If the RMC owes money for service charge expenditure as a contractor is the contractor a creditor or a debtor?

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  • eagle2
    replied
    If the RMC has raised invoices, the amounts are included within its income and the only income would normally be service charges. If the directors were claiming monies from the RMC, the amounts would be included within expenditure and would also be included within the same note to the accounts. The directors loan account should also be mentioned as they are related party transactions.

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  • SHill
    replied
    Thanks Gordon 999 The S.27a application has been finalised. I am now trying to understand the Company accounts to ensure the Directors are not misusing them for improper purposes. ie tax avoidance.

    They have refused to hand over the service charge bank accounts (trust monies) and Service charge accounts to the S.24 Appointed Manager. This blatant non compliance of the Tribunal Order raises suspicion why they are refusing.

    I am trying to understand what rules been put in place to ensure Directors of an RMC behave properly in relation to what they can claim against a RMC and what legitimate invoices can a RMC raise. I was of the understanding that a RMC was an inactive Company and the Service charge statement was prepared separate from the Company accounts and the service charge falls outside of taxation.

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  • Gordon999
    replied
    You should make application to the FTT for judgement on the service charge which you believe is overcharged and you are not given access to inspect the receipts.

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  • SHill
    replied
    ... sorry what I am not understanding is why would a RMC raise invoices to a Director? It would be usual for a Director to claim invoices against a Company.

    In what circumstances would a RMC raise an invoice to a Director?

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  • SHill
    replied
    .... The Company is raising invoices for approx £ 4000-6000 pa for 2 x Directors.

    To put it in context the Appointed Managers fee is £3,000 pa ( small building with 4 x one bed flats) very little management, no lift, no garden no common parts to speak of - just a stairway. (Upkeep of stairway is a separate cost between 2 leaseholders which falls outside of service charge)

    In relation to the related party transactions ( invoices raised to the Directors Company) the Company would not have raised any legitimate professional fees for the building because no major works have been instructed for 16 years. All other costs are covered by service charge.

    1. What expenses are the Directors allowed to claim if the Company is a RMC they live at the leasehold flats, but they issue service charge demands and “manage”the property ( this was the position from 2004-2015) and

    2. What expenses are the Directors allowed to claim if the Company is a RMC they live at the leasehold flats, but there is a Manager looking after the service charge and building ( this was the position from 2016-2020)

    Are the Directors required to notify all the members first before taking money from the Company?

    Thank you

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  • SHill
    replied
    Thank you for your response

    How could further information be obtained?

    The NOTES to the service charge only give this information with no detail .

    The company has raised invoices to a Company that is owned by the Director under 5. Related party transactions and

    The company has raised invoices to the other Director under Transactions with Director and in both cases the invoices relate to where they live. ( there leasehold properties)

    What are “normal service charges issued to the directors.”

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  • eagle2
    replied
    We would need further information but they could be the normal service charges issued to the directors.

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  • SHill
    replied
    ..........they are not listed on the Notes to the Abbreviated accounts filed at Companies House. Just wondering about the statutory trust concept relating to the RMC Accounts

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  • SHill
    started a topic Accounting for RMC

    Accounting for RMC

    Would anyone be able to advise if a RMC can raise sales invoices to Directors, for property expenses that relate to their leasehold properties. The sales invoices raise are itemised in the Notes to the service charges at. 4. Transactions with Directors and 5. Related party transactions

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