Service charge accounts
Have just read ICAEW technical release "Accounting for Service Charges", 01/10. Service charge monies in respect of variable service charges are subject to a statutory trust (s42 of LTA 1987). This means that they must not treat service charge funds as belonging to the company. As the transactions are not in the name of the Service Charge company the company will not have any figures to disclose and it will be dormant for the purposes of the C.A.
The commercial property I am dealing with is not entirely occupied by tenants. It is mostly occupied by the owners along with a couple of tenants. Are the service charge monies collected from the occupiers/owners subject to a statutory trust? If the answer is no, what accounting guidance can I refer to for help? Would the management company have to open a bank account in its own name (if service charge monies are not to be hold in a trust) and have all transactions in its name and therefore VAT and CT returns would need to be done, along with filing annual accounts (which are not dormant!).
If the service charge monies are subject to a statutory trust, can the company register for VAT but at the same time file dormant company accounts?
Hope someone can help!
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