There are reportedly more than 60,000 registered Residents’ Management Companies (RMCs) in the UK.
Established to protect the interests of leaseholders and run by residents, RMCs are responsible for managing the upkeep of communal areas such as hallways, staircases, drives, and gardens. These costs are funded by service charges paid by the leaseholders.
In addition to making service charge payments, residents may contribute towards unanticipated costs, such as repair work. This can either be done through one-off payments or by setting up a reserve fund within the service charge accounts that can be used when these unexpected costs occur.
All RMCs have a duty to keep accounting records
While RMCs tend to be run by resident-directors, who have been appointed by other residents, they are still recognised as companies. They are therefore expected to provide a full audit trail of their finances and keep their accounts up-to-date.
They are also required to submit their accounts on an annual basis in accordance with the latest HMRC guidance. This can be time-consuming and complex for some RMCs.
Many RMCs may choose to prepare and submit their annual statutory accounts themselves. However, while this may appear to be the most straightforward option, it can lead to them being penalised by HMRC. This can be because their records:
- Contain inaccurate figures
- Have been submitted late
- Are missing information
- Have been submitted inaccurately (particularly with the implementation of Making Tax Digital)
In addition to receiving penalties, the directors can potentially be prosecuted if their accounts do not comply with the current legislative requirements.
For some RMC directors, keeping accounts and staying on top of financial reporting duties may be something they’re familiar with. However for others, it may be totally new territory, which can be difficult to understand.
In these circumstances, it’s advisable to seek professional support, ideally from an accountant that specialises in working with RMCs. At OR, we understand how RMCs operate and can provide guidance and support on what’s required of you.
If you are part of an RMC and need help with preparing or submitting your accounts, contact us on 01905 777600 or hello@ormerodrutter.co.uk.
