RMC Banking - Client Accounts

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    RMC Banking - Client Accounts

    I (along with two co-directors) set up banking arrangements for an RMC back in 2019. We did it “properly” - we were advised that the notionally dormant RMC should keep an empty business account and put all the funds in a separate ringfenced client account, so we did it that way. We’re self managing.

    The RMC’s accounts are those of a dormant company - we discussed with our accountant and she advised that it should be that way.

    What’s the point though? The business is owned by 11 shareholders and the funds held are all in the client account, ringfenced for the protection of…the 11 leaseholders. The same 11 people. What does this arrangement actually achieve except making life unnecessarily complicated?

    Where a leasehold is being managed by an outside property management company, the client account arrangement makes perfect sense and provides useful protection. But here?

    Does everyone in this situation bother with the separate client account? If they don’t, does anyone really care?

    #2
    The monies must be kept in a client account because they do not belong to the company and they need to be protected. For example, if the RMC failed to file dormant accounts and Companies House took action to strike it off, the monies would be lost,

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      #3
      The service charge funds held in a separate ring fenced account belongs to the leaseholders.

      The RMC has to file annual accounts to Companies House and reports its "dormant company" status. Filing annual accounts is a legal requirement for companies in UK.

      If the service charge is held in a bank account under the RMC name, it will be reporting the service charge money as if belonging to the RMC.

      So it does matter because some RMC companies are poorly operated when the directors are controlled by the MA.

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        #4
        The service charge monies do not belong to the leaseholders, they are held in trust and may be used by the trustee only for the purposes set out in the lease, Otherwise the leaseholders could claim repayment.

        I accept that there are problems when the trustee does not use the funds for their proper purpose but that can happen whoever is the trustee,

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