TDSI Bulletin 34 - 28 August 2009

This bulletin tells you about:

• Flat Management Companies (FMC)

Please ensure the appropriate people in your organisation read this bulletin.

Enquiries about this bulletin should be addressed to Savings & Audit.

The Tax Deduction Scheme for Interest (TDSI) pages are available on the HM Revenue & Customs (HMRC) website.

Flat Management Companies (FMC)

Section 42 Landlord and Tenant Act 1987 (LTA) provides that a FMC can be treated as a Discretionary and Accumulation Trust. This means that interest paid on a deposit made by a FMC should have tax deducted despite the 'company' status. There will be no Trust Deed in these cases.

Banks and building societies will need to hold evidence before they begin making net payments to a company. As there is no Trust Deed we suggest that banks etc obtain a signed declaration from the company certifying that the funds to be held in the bank account are, under section 42 LTA 1987, held by the company in its capacity as a trustee of a trust to hold service charges.

Before we add this to the Guidance Notes, we would welcome any comments about alternative evidence that could be more appropriate. Could we please have any responses by 25 September 2009?