Introduction

So, you and your neighbours have claimed the Right to Manage (RTM). Great news – you’re now in charge of running your block. But here’s where things can get confusing: accounts. Leaseholders often ask why they’re given service charge accounts and RTM company accounts – aren’t they the same thing? The short answer is no. They cover different things, serve different purposes, and even go to different places. In this blog, we’ll break down the difference in plain English, explain why two sets of accounts are needed, and help you understand who sees what.

What are service charge accounts in a block of flats?

RTM company accounts and why two sets are needed

RTM company accounts are different from service charge accounts because they relate to the RTM company itself as a legal business. Like any other company, the RTM must file annual accounts with Companies House. These show the company’s finances – such as administrative costs, bank balances, and whether the company made a profit. RTM companies are usually not-for-profit, but they must still comply with company law.

It’s important to understand that some RTM costs cannot be classed as service charge because they aren’t written into the lease. When leases were drafted, they didn’t anticipate an RTM company existing. That means items like directors’ and officers’ insurance, or having a company secretary to deal with legal filings, must be treated as RTM company expenditure—not service charge.

This is why two sets of accounts are needed. Service charge accounts are about the building and the leaseholders’ money, required under landlord and tenant legislation. RTM company accounts, meanwhile, are about the company as a legal entity. Having both ensures transparency and accountability under both leasehold law and company law.

Who prepares the service charge accounts and the RTM company accounts?

Service charge accounts are usually procured by the managing agent or the RTM company directors and prepared by a suitably qualified accountant. They follow leasehold law rules. RTM company accounts, on the other hand, must be filed with Companies House and usually require an accountant too. In smaller blocks, directors sometimes do them themselves, but it’s often safer to get professional help.

Where are the accounts filed or shared?

Service charge accounts don’t get filed at Companies House. They must be shared with service charge payers (leaseholders) and, in some cases, provided to tribunals if disputes arise. RTM company accounts, however, must always be filed with Companies House. That means anyone can look them up online, just like with any other company. They too should be shared with the company members or company shareholders.

What happens if the accounts aren't prepared properly?

If service charge accounts aren’t clear or accurate, leaseholders can challenge them at the First-tier Tribunal. This can cause disputes and even legal costs.

If RTM company accounts aren’t filed at Companies House, the company can get penalties and directors can be fined. In the worst case, the RTM company could even be struck off – which would be a disaster for the block – as it makes it very hard if not impossible for flats to sell until resolved. So, it’s vital to get both right.

Running an RTM company comes with lots of responsibilities, and keeping track of the money is one of the most important. Remember: service charge accounts show how leaseholders’ money has been spent on the building, while RTM company accounts are about the company itself. Both matter, both need to be done every year, and both help keep the block running smoothly and fairly.

Think of ServiceChargeSorted.co.uk as your all-in-one online administrator for small flat blocks. Rather than hiring a managing agent, you can set your budget, upload maintenance bills, and we handle finances, arrears chasing, legal debt recovery, annual accounts, and compliance—all viewable via your bank-account-style interface. Looks too easy? Discover the benefits.

ServiceChargeSorted.co.uk takes care of the finances and includes ensuring the company accounts are filed at Companies House and service charge accounts are prepared and served on service charge payers.