The service charge year-end pack managing agents should prepare before sending accounts to an accountant
A smooth year-end handover starts with a complete scheme-by-scheme pack, not simply a ledger. Your accountant needs each scheme’s trial balance, bank statements and reconciliations for the full period, demand and apportionment schedules, aged arrears, significant supplier invoices, reserve fund movements and relevant section 20 consultation records. For commercial property, the RICS professional standard requires approved service charge accounts to be issued within four months of the year end. Preparing the pack early gives your accountant time to reconcile balances, investigate discrepancies and prepare statements that meet the lease and reporting requirements.
Delays commonly arise from missing statements, unexplained balances or uncertainty about which apportionment schedule is current. Resolving those points before handover can prevent repeated queries and missed deadlines.
What to include, scheme by scheme
| Item | Why your accountant needs it |
|---|---|
| Trial balance or nominal ledger for each scheme | Establishes the opening figures and recorded transactions |
| Complete bank statements and reconciliations | Verifies balances and highlights unexplained differences |
| Demand schedule and apportionment matrix | Confirms each unit’s share and the amounts demanded |
| Aged arrears and year-end prepayments | Identifies outstanding debts and advance receipts |
| Invoices for substantial expenditure | Supports costs, accruals and any capital analysis |
| Reserve or sinking fund movement schedule | Separates longer-term funds from annual expenditure |
| Section 20 consultation documents, where applicable | Supports compliance with residential consultation requirements |
| Interest earned on service charge accounts | Helps allocate interest appropriately to the scheme |
| Previous accounts and carried-forward balances | Confirms that opening figures agree with prior statements |
| Relevant leases and service charge provisions | Establishes which costs and apportionments are recoverable |
Include insurance information, utility reconciliations and a brief explanation of unusual movements. A note explaining why a block’s cleaning expenditure rose substantially may save several rounds of queries during preparation.
The checks worth doing before you send it
Three checks deserve particular attention.
First, reconcile the bank balance to the ledger and investigate outstanding entries. Unexplained differences should be resolved before the accountant begins the year-end work, including balances held in designated or virtual scheme accounts.
Second, confirm that apportionments match the leases and allocate the recoverable costs correctly. They should ordinarily total 100% across all responsible parties, including any landlord contribution for vacant units. Check amended unit schedules carefully.
Need Expert Accounting Advice?
If you are unsure about tax, bookkeeping, payroll, property accounts or business finances, speak to the team at FHP Accounting for clear, practical guidance.
Third, match expenditure to the correct accounting period. If a contractor completes work in January but invoices in March, the cost should generally be recognised in the period when the liability arose under accruals accounting, not automatically the invoice date.
Our guide to service charge setup and reconciliation explains the records to keep, while what to include in year-end statements describes the completed accounts.
Residential and commercial have different clocks
| Scheme type | Key timing |
|---|---|
| Commercial | RICS requires approved year-end service charge accounts within four months, subject to the applicable standard and lease |
| Residential | Under section 21, a requested summary is due within one month of the request or six months after the accounting period ends, whichever is later |
| Residential | Section 20B generally restricts recovery of costs older than 18 months unless the leaseholder received qualifying written notice in time |
The 18-month rule under section 20B of the Landlord and Tenant Act 1985 concerns qualifying residential service charges, not commercial schemes generally. A demand made too late may be irrecoverable unless the landlord notified the leaseholder in writing within the statutory period that the costs were incurred and a contribution would follow.
The second edition of the RICS commercial service charge standard took effect on 31 December 2025, with transitional arrangements for earlier accounting periods. Our article on what the updated code means for property managers explains the changes. Residential managers should also consider the fourth-edition RICS residential code, effective from 7 April 2026, alongside our RICS and ARMA best practice guidance.
Where the pack routinely falls short
Vacant units are a frequent source of discrepancies. Where the landlord must meet service charges attributable to empty commercial space, show that contribution separately rather than reducing reported expenditure. Our guide to commercial property management accounting explains the presentation.
Reserve funds are another potential problem. Record money collected for future works separately and provide a schedule of opening funds, contributions, spending and closing balances. Resident-owned companies may need statutory company accounts alongside service charge statements. See our guide to RTM annual accounts and profit and loss filing checklist. The proposed Companies House requirement for small companies and micro-entities to file profit-and-loss accounts is scheduled for April 2028, with an option to prevent publication.
For commercial schemes where VAT applies, provide relevant invoices, VAT treatments and returns so the accountant can reconcile the figures. Check your HMRC VAT account for discrepancies before sending the pack.
Sending a complete, reconciled pack earlier can reduce queries, avoid duplicated bookkeeping and improve turnaround times. Confirm the timetable and any outstanding documents with your accountant before the reporting deadline approaches.
Hand over a pack that gets a quick turnaround
If several year ends are approaching, FHP Accounting can help you organise the required documents and resolve outstanding entries. We provide service charge accounting, support for managing agents, residential property management accounting, commercial property management accounting and annual statutory accounts for relevant property companies, including RMCs and RTMs. Get in touch to request our year-end pack checklist and discuss your schemes.
I lead FHP Accounting, an accountancy practice specialising in Commercial and Residential Property Accounting. Our goal is to make the administration of running property portfolios easier for landlords, managers, and investors — allowing you to focus on what you do best, while we take care of everything behind the scenes.
Need Expert Accounting Advice?
If you are unsure about tax, bookkeeping, payroll, property accounts or business finances, speak to the team at FHP Accounting for clear, practical guidance.
