Property Management Co

by **GRIFF1980** on Tue May 17, 2011 3:28 pm

Hi

A friend of mine has setup a property management company along with another resident for the gated community in which they live in.

There are around 6 houses within this and all the company does it pay out for costs such as repairs / maintenance from monies given by the residents. It does hold its own bank account.

The accountant who originally was involved has set this up as a dormant company, limited by guarantee and it files a nil balance sheet each year as its dormant accounts.

The questions I have are:

1) Is it correct in that it can be technically classed as dormant?
2) If it does hold a bank account why are any amounts held at end of year not shown on the balance sheet?
3) If it receives monies from residents and pays out for maintenance etc why is there no profit & loss account?

It is not setup to make a profit merely to cover small repair costs.

They now have received a letter from HMRC asking them to confirm if they should be paying corporation tax etc and if any income is received. If it can be classed as dormant then I guess they can say it does not receive income and is a dormant property management company, but would be grateful for some advice.

Many thanks

by **section 44** on Thu May 19, 2011 11:10 am

Does the company act as a nominee for the residenets or does it act on its own account?

by **GRIFF1980** on Thu May 19, 2011 11:25 am

On its own account

Thanks

by **section 44** on Thu May 19, 2011 11:40 am

GRIFF1980 wrote:If it can be classed as dormant then I guess they can say it does not receive income and is a dormant property management company

I'm not an accountant and cannot comment on your accountancy questions but, as fact, it has income: the service charge payments from residents and (presumably) interest on its bank account.

Isn't the point of this that its a not for profit company (hence no profits on which to pay corporation tax)?

by **Chanmuganathan** on Thu May 19, 2011 2:02 pm

If it is a RTM Company then The accountant is right.

It should file the dormant accounts and nothing to pay for corporation tax.

However the trust should prepare a S21 certificate for the lesees also need file a trust tax return for the bank interest received (if gross).

The way to avoid Trust return is to advice your bank to pay interest net.

by **GRIFF1980** on Thu May 19, 2011 2:16 pm

Thanks for the replies.

It has not been setup as a RTM company and there are no lesees.

It has been setup, originally I believe by the solicitor or the builders who built the properties. It has now been taken over by two of the residents to manage and the accountant is filing dormant accounts.

The residents just pay in money to cover repairs, utlity costs such as electric for the electric gates is borne by one of the residents who gets this on his electric bill and then takes money out of the company bank account to cover this proportion.

I just cannot understand why this was setup and why it files dormant accounts etc..