Resident management companies & service charges
How do others with resident management company clients - ones where all the occupiers of leasehold flats are members of a company which collects service charges and pays out for communal expenses - prepare accounts?
Although the company is not the landlord, it appears that s.42 Landlord & Tenant Act 1987 (requiring that the company is only holding the service charge money in trust for the tenants) and s.21 LTA 1985 (requiring separate accounts for the service charges trust) apply. This has prompted the ICAEW to issue TECH 01/10, Accounting for Service Charges, which indicates that as the service charges are held in trust, the company itself will often be dormant, and specifying the format of the service charge accounts. This is despite the fact that all the tenants have set up the company for the sole purpose of handling the service charges.
I have asked in the Product Suggestion section of the IRIS Customer Forum if there are any plans to introduce a specialised chart of accounts and a specialised report to allow users to prepare the statutory (often dormant) accounts and the service charge accounts simultaneously, as suggested in TECH 01/10, but there has been no response.
So, do other IRIS users continue to produce "normal" company accounts containing all the service charge and communal expenses - on the grounds, perhaps, that the ICAEW release is still only a draft - or do others produce dormant statutory accounts and separate service charge accounts, perhaps using chart EPST?