Companies House reforms: what managing agents and resident directors need to know

Managing agents overseeing multiple companies should use the lead-in period to review their arrangements. Volunteer directors should establish who is responsible for preparing and submitting their company’s accounts—and whether the current process will remain suitable.

What is changing?

From 1 April 2028, annual accounts filed with Companies House will need to be submitted through commercial software in the required digital format. The existing web and paper routes for accounts filing will close.

This applies to companies filing their own accounts and those using an accountant or another agent. It is particularly relevant to smaller resident-controlled companies whose directors currently submit accounts themselves.

The wider reforms include additional filing requirements for small and micro companies, the removal of the option to prepare and file abridged accounts, and an enhanced statement from directors where an audit exemption is claimed.

Small and micro companies will be required to file their profit and loss accounts, although they will be able to opt out of having that information published on the public register. The requirements applicable to each company will depend on its circumstances and the accounts regime it qualifies to use.

Two sets of accounts, serving different purposes

For the residential sector, a crucial starting point is understanding the distinction between service charge accounts and statutory company accounts.

Service charge accounts explain how money collected for the building has been spent and what balances remain. They allow leaseholders to understand expenditure, reserves and the financial position of the service charge fund.

Statutory company accounts meet the company’s obligations under company law and are filed with Companies House.

These are separate reporting responsibilities. Completing the service charge accounts does not, by itself, satisfy the company’s annual accounts filing obligations.

Where residential service charge money is held on statutory trust, it should not simply be treated as the company’s own income or reserves. The accounting treatment needs to reflect the arrangement correctly.

The new filing rules do not remove this distinction. They make it a useful time to check that everyone involved understands it.

Dormant does not mean exempt from filing

Many RMCs and RTM companies file dormant company accounts while producing separate service charge accounts for leaseholders.

However, dormant status should follow an assessment of the company’s actual transactions. It should not be assumed simply because the company exists to manage a residential building or does not seek to make a profit.

Income or expenditure belonging to the company itself may affect the position. Equally, service charge transactions involving money held on trust need to be considered in their proper context.

A company can therefore have substantial service charge activity associated with its building without those receipts automatically becoming its own trading turnover.

Directors should also remember that dormancy does not remove the obligation to file annual accounts and confirmation statements. The move to software filing means even companies with very simple accounts should review how future submissions will be made.

What should managing agents do now?

For an agent overseeing a portfolio of resident-controlled companies, the most useful first step is a company-by-company review.

That review should establish:

• Who prepares, approves and files the statutory company accounts.

• Whether dormant status remains appropriate.

• Which accounts are currently submitted through web or paper routes.

• Whether the appointed provider can support the new filing requirements.

• Whether company accounts and service charge reporting responsibilities are clearly documented.

Agents should also check that Companies House correspondence reaches the right people. Changes of director or managing agent can leave important communications going to an address or inbox that is no longer monitored.

Where directors file accounts themselves, discuss the transition early. A process that has worked for years may need to change, and responsibility should be agreed before the next filing deadline becomes urgent.

Use the transition to improve the process

For many well-organised residential companies, the reforms should be manageable. The greater difficulty is likely to arise where responsibilities are unclear, dormant status has never been reviewed, or everyone assumes somebody else is dealing with the filing.

April 2028 provides time to prepare. Using that time to check the company’s position, confirm responsibilities and agree a suitable filing process should help avoid unnecessary disruption.

Accurate service charge reporting and sound company compliance both matter to the effective running of a residential building. They deserve equal attention.

Graham Knight FCCA, Service Charge Partner at Knight Accountants