54 property
Important new guidance on service charge accounting
Important and potentially controversial new guidance on accounting and reporting in relation to residential service charge accounts for residential properties has just been released and is set to affect thousands of blocks of flats across the country.
Nick Bullen, partner at Whitley Stimpson and specialist in service charge accounting, explains: “Without doubt, awareness of the need for better service charge accounting is required in order to improve standards and promote best practice in the administration of service charge accounting. However the issue as to whether the service charge transactions should be included in the landlord’s own accounts has been referred to the ‘Urgent Issues Task Force’ to deliberate on. Should they do so, no additional guidance is expected until 2012.”
This guidance relates to residential leasehold property on which variable service charges are paid by leaseholders in accordance with their leases to cover the cost of providing services, repairs, maintenance, improvement, insurance or management.
It has been prepared
by a joint working group comprising representatives of the Association of Chartered Certified Accountants (ACCA), the Institute of Chartered Accountants of England and Wales ICAEW, the Association of Residential Managing Agents (ARMA) and the Royal Institution of Chartered Surveyors (RICS).
Some of the key messages on best practice in the guidance include:
• All lessees paying variable service charges should receive an annual service charge statement from their landlord or Residents’ Management Company (RMC) (including Right to Manage Companies (RTMCo)) within six months of the end of the accounting year.
• The annual statement should include an income and expenditure account and a balance sheet and be prepared on an accruals basis. This guidance includes an illustrative example of a service charge statement.
• All annual statements of account should be subject to an examination by an independent accountant before issue to lessees where the costs can be recovered in the service charges.
• If the service charge statement is prepared on behalf of an RMC or RTMCo then it
www.businessmag.co.uk Nick Bullen
“Companies House appear to take a softly softly approach to the filing of RMCs and RTMs statutory accounts in terms of appropriate disclosures and content of accounts. If the position changes following this guidance release, then the imposition of potential significant late filing penalties may occur if Companies House reject filed accounts close to the filing deadline. Such penalties, and the cost of re-working the accounts, may fail to be recoverable from the tenants. This may be in addition to any costs, which are not recoverable from tenants where more than 18 months has elapsed since the cost was incurred. RMCs/ RTMs should ensure that they provide their tenants with service charge accounts within six months to meet their obligations.”
Accounting for service charges in the property industry is a specialised area that requires expertise and an understanding of the sector. For specialist advice in this area see details.
Details: Nick Bullen
nickb@whitleystimpson.co.uk 01295-270200
should be a separate statement to the annual accounts for the company required to be filed at Companies House.
Bullen goes onto say: “Many RMCs and RTMs still continue to include, incorrectly, service charge transactions in their accounts and fail to ensure that corporation tax liabilities, if any, are correctly calculated and, as such, fail to follow the statutory trust concept relating to service charge transactions.
Full house for Kings Reach
Kings Reach, Prudential’s 37,000 sq ft office building on Kings Road in central Reading, is now fully occupied following the latest letting to recruitment company Randstad UK.
Randstad has taken 7,945 sq ft on the second floor of the building on a sub-lease from Prudential until mid-2014. This deal follows earlier lettings on similar terms to communications agency Mongoose, which took 3,263 sq ft, The Office of the Independent Adjudicator for Higher Education (OIAHE), which took 7,753 sq ft, and insurance group Aviva, which took 3,151 sq ft.
These tenants join existing occupiers 8el, the Passport Office and Prudential itself.
Hicks Baker and Parkinson Holt were the letting agents for Prudential. Randstad UK Holdings was unrepresented.
Details: Stephen Head Hicks Baker 0118-9557089
s.head@hicksbaker.co.uk www.hicksbaker.co.uk
New HQ for Softcat
Softcat, the Marlow-based IT services provider, has completed the purchase of a new headquarters following the rapid expansion of the company over the past two years, during which time it has doubled both its turnover and headcount.
The company, which achieved a turnover in excess of £200 million in the past financial year, will not have far to move – its new home is next door to its current headquarters on Fieldhouse Lane in Marlow. The new office space has a floor area of 27,000 sq ft, which is more than 50% larger than at its current building. Softcat is to take its time on the move and expects to be fully installed towards the end of 2012.
Details:
www.softcat.com THE BUSINESS MAGAZINE – THAMES VALLEY – DECEMBER 11/JANUARY 12
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61