Separate bank account required for sinking funds?

Audit of a flat management company

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Hi, can anyone please advise if there is a legal requirement for a management company to have a separate designated interest bearing bank account for sinking fund contributions or can the service charges and sinking fund contributions be held in the same account? Many thanks

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By Paul Crowley
20th Sep 2020 03:07

No
Chances are the interest will be trivial.
Santander pays £12 pa on £110,000.Rate .01% ie 1% of 1%

Get the idiot telling you this to quote legal reference.
I advise all mine that accounts fee goes up by £50 for each extra bank account

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RLI
By lionofludesch
20th Sep 2020 07:32

Unless there's some requirement in the lease or Articles or other legal document, no.

Why are you having an audit ?

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Replying to lionofludesch:
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By Paul Crowley
20th Sep 2020 14:57

Missed the word audit

@OP
Did you really mean audit?
Accountants use the word in a precise and VERY expensive way

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Replying to Paul Crowley:
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By covid19
20th Sep 2020 20:43

Thanks for the response, yes we are doing an audit of the flat management company. Section 42(a) of the Landlord and Tenant Act 1987 states that service charge contributions should be held in a designated account but I don't know if it means the sinking fund contributions or the service charges.

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Replying to covid19:
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By Paul Crowley
20th Sep 2020 22:05

The service charge money belongs to the service charge payers
Not to be mixed with rent belonging to the landlord

Who has requested an audit?

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Replying to lionofludesch:
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By covid19
20th Sep 2020 20:43

Thanks for the response, yes we are doing an audit of the flat management company. Section 42(a) of the Landlord and Tenant Act 1987 states that service charge contributions should be held in a designated account but I don't know if it means the sinking fund contributions or the service charges.

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Replying to covid19:
RLI
By lionofludesch
20th Sep 2020 21:00

Why are you having an audit?

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