Plan for the rent deposit to remain tied up after closure
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A rent deposit shown in the accounts is not cash available to pay next week's closure bills. Before using an expected return in the forecast, find out what governs its release, who holds it and what remains unresolved.
The RICS leasing code for England and Wales, in its guide for landlords and tenants, recommends professional advice on the conditions for holding and repaying deposits. It says agreed arrangements should be recorded in a rent deposit deed. The code does not establish the outcome under your particular deed.
Reconcile the current deposit record
A bank entry from the beginning of the tenancy may show the original payment. It may not explain later additions, withdrawals, interest or a change of holder. Gather the available records and ask the property adviser which further documents are needed.
Keep one deposit follow-up record:
| Item | Record or question |
|---|---|
| Property and tenant | Address and exact entity named in the arrangement |
| Governing documents | Deposit deed, lease and relevant later agreements |
| Amount | Latest statement and any difference from the business's records |
| Holder | Current confirmed contact and evidence of any change |
| Release position | Adviser's explanation of conditions and unresolved matters |
| Next enquiry | Person responsible, question sent and response outstanding |
Do not decide that the landlord can retain a particular sum merely because it has been mentioned in correspondence. Equally, do not assume the full balance is due immediately because the building is empty. Pass the documents and correspondence to the adviser.
Show the cash consequence without guessing the legal result
In a fictional closure forecast, an owner expects £8,000 of bills next month and has £6,000 of available cash. The accounts also show a £4,000 rent deposit. If its release remains unresolved, treating it as available conceals a £2,000 funding gap for that month.
A clearer forecast shows £6,000 available, £8,000 required and the £4,000 deposit as a separate uncertain receipt. The accountant can then advise on the forecast and the owner can address the actual payment position. The figures illustrate timing only; they are not a deposit valuation or advice to delay payments.
Use the same distinction in a two-premises budget. A new deposit payment and a possible old deposit return can occur at different times even where the amounts look similar.
Keep the enquiry alive after the team leaves
Appoint someone to receive statements and adviser correspondence after the site closes. Make sure the relevant records remain accessible through the business's authorised arrangements. A closed office inbox should not become the only route to the person following up the deposit.
Where works or settlement discussions remain open, ask the adviser how they affect the deposit enquiry. If a later property claim arrives, provide it promptly with the existing file rather than starting a separate account of events.
For equipment the business intends to sell, UK Auction Group can discuss the closure enquiry. Keep possible sale receipts and possible deposit recovery as separate forecast items until their actual amounts and timing are established.
See Leaving business premises for other costs and decisions that can continue after trading stops.
Sources
This guide is general information and education only. Legal, tax, employment and safety decisions may need a qualified adviser who knows your situation. Read the disclaimer.