Landlord and Tenant Act 1987, Section 42, provides that a flat management company can be treated as a Discretionary and Accumulation Trust.

This means that interest paid on a deposit account made by such a company may, in some circumstances be paid net despite the company status.

Banks and building societies require evidence before they begin making net payments to a company.  As there is no Trust Deed in these cases, HMRC suggest that they obtain a signed Declaration from the company certifying that the funds to be held in the bank account are, in accordance with Section 42, held by the company in its capacity as a Trustee of a Trust to hold service charges.

Posted on 07 Oct 2009