Corporation tax for property management company

[muni]

Hello,
I wonder if anyone can help me.
The company in question acts as residents' property management company in respect of a building with a number of flats. Its Financial Statements state that:
"The company is not chargeable to tax other than in respect of investment income"
For the year ended 31.12.2010 there is no investment income.For 2009 there was investment income of £22.
I need to find out what is this company supposed to do in respect of corporation tax return? Does it have to file one?
I've been asked to help a friend and tried to read on the matter but I don't know where to start to be honest. Can somebody help me?
My friend is the director of the company,but only joined in last year. At that point previous director and accountant resigned and no takeover took place. So she has no idea what they have been doing in the past in that respect. The company currently do not have an accountant. As deadline for CT is 31.01 she is in panick. I work in finance but do not prepare accounts for that sort of company or tax returns.
Thank you in advance for your help.

 

Who prepared the accounts if there is no accountant ? Presumably this person will know what else is required

A CT return is due and I suggest that you get an accountant "soon as"

 

[muni]

Thank you. This is what I suggested as well.
I found this on the HMRC website:
[FONT=&quot]Property Management Companies[/FONT][FONT=&quot][/FONT]
[FONT=&quot]HMRC may apply this treatment to your property management company if, as well as meeting all the criteria laid out in the previous sections, it meets all of the following additional criteria:[/FONT]

• [FONT=&quot]Your company's business consists of the management, on a non profit making basis, of a block(s) of flats or apartments for the owners, lessees or tenants of the flats or apartments.[/FONT]
• [FONT=&quot]Your company's Articles of Association ensure that only people who have an interest in the managed property own the company's shares.[/FONT]
• [FONT=&quot]Your company must not be entitled to receive any income from land.[/FONT]
• [FONT=&quot]Your company can't pay dividends or make any other distribution of profit.[/FONT]

[FONT=&quot]But if your property management company receives service charges which it must hold on trust for its tenants, it will be liable to Income Tax on any interest that arises on that fund. In effect, your company is acting as a trustee and may be required to deliver a tax return to the relevant HMRC Trust Office.[/FONT]
[FONT=&quot]Income from service charges for UK properties that's held on trust is chargeable at the standard tax rates. For example, basic rate in the case of bank interest as trustees are not entitled to starting rate for savings income. [/FONT]
[FONT=&quot]Generally, where the income is below £1,000 and taxed at source, you won't need to complete a return every year.[/FONT][FONT=&quot][/FONT]

 

[muni]

Accounts were prepared with the help of another friend, as far as I know.

 

[Shape property management]

You need to file dormant company accounts which is standard for residents management companies with such low incomes. If in any doubt contact a bookkeeper and they will be able to file this for you at a reasonable cost.

 

[David Griffiths]

You cannot file dormant accounts in those circumstances. Companies House guidance is quite clear

1. What is a dormant company?


A company is dormant if it has had no 'significant accounting transactions' during the accounting period. A significant accounting transaction is one which the company should enter in its accounting records.

 

[EH.M]

Hi,
Company needs to submit accounts to companies house and HMRC. CT return needs to be filed online even if no tax is due.

 

[Jaydee]

You cannot file dormant accounts

David, many practices are now doing so for residents' property management companies on the basis that all transactions are as trustees for the lessees and even the closing bank balance is held on trust.

Our institute's guidance seems to be moving that way too, although as I understand it no definitive ruling has yet been made (unless I have missed it).

 

[David Griffiths]

David, many practices are now doing so for residents' property management companies on the basis that all transactions are as trustees for the lessees and even the closing bank balance is held on trust.

Our institute's guidance seems to be moving that way too, although as I understand it no definitive ruling has yet been made (unless I have missed it).

Interesting, especially in the light of Companies House stating that the trigger point is "significant accounting transaction" - that doesn't say that the company has to own the money it's banking or paying, just that it needs to record it in its books

 

[Jaydee]

This is the last guidance that I saw:

http://www.icaew.com/~/media/Files/...-law-and-guidance/service-charge-accounts.pdf

The thinking was/is that dormant accounts go to Companies House and service charge accounts go to the lessees.

 

[David Griffiths]

This is the last guidance that I saw:

http://www.icaew.com/~/media/Files/...-law-and-guidance/service-charge-accounts.pdf

The thinking was/is that dormant accounts go to Companies House and service charge accounts go to the lessees.

Things have moved on since that was issued two years ago. The UITF has proposals on the table, but not yet finalised, that could well change this.

Basically, if the management company acts as a disclosed agent for the tenants/freeholders, then the transactions do not go through its accounts.

However, if it contracts in its own right, or does not inform the supplier that it is acting as agent, the transactions go through the service company P&L, offset by the drawdown from the bank account.


(Guess who was on a course this morning! )