What financial evidence does Ofsted actually ask for?
Ofsted wants proof that your service can pay for itself: a business plan, a cashflow forecast, and your last two annual reports and accounts, unless you are applying as a local authority or health authority. That is the whole financial spine of a supported accommodation registration, and it is the part most first-time providers underestimate. This guide is written by LOYALS, a King's Cross firm of chartered accountants that builds Ofsted financial viability packs and runs payroll and council billing for London children's homes and supported accommodation providers.
A quick definition first, because the label trips people up. Supported accommodation means accommodation with support (but not care) for looked after children and care leavers aged 16 and 17, the semi-independent step between a children's home and living alone. Since the Supported Accommodation (England) Regulations 2023 came into force, it sits under Ofsted, not the Care Quality Commission (CQC, the regulator for adult care), and it carries four Quality Standards: leadership and management, protection, accommodation, and support.
You apply on the SC1 form, the standard "register a children's social care service" application. Alongside the financial documents, Ofsted asks for a statement of purpose, a young person's guide, a set of policies (safeguarding, missing child, behaviour management, complaints and a contingency plan for closure), evidence your premises are fit for purpose, and a certificate of insurance or written confirmation that insurance will be in place before you open. The financial evidence is assessed together with all of that when Ofsted weighs your fitness to run the service.
If you run more than one home, or you have specialist funding, this is exactly the point where a generalist accountant and a care specialist part company. For the wider service, our children's home accountants page sets out how we handle registration, payroll and the ongoing numbers, and the registration pack itself sits under annual accounts and corporation tax. What follows is the financial detail Ofsted is really testing.
The business plan, and the financial plan inside it
Your business plan is the document Ofsted reads first, and its minimum structure is set out in Ofsted's guidance for applicants: background information, a marketing plan, a financial plan and an operational plan. Miss any of the four and the pack looks thin. The financial plan is where the viability question is answered, and the operational plan is where you prove you can staff the service you are promising.
Background information sets the scene: who the provider is, which category of accommodation you offer (single occupancy, shared, or private residential such as supported lodgings), and the local need you are meeting. Keep it short and specific. Ofsted is not marking your prose, it is checking that a real, deliverable service sits behind the numbers.
The marketing plan is really a demand plan. It answers a blunt question: where do your placements come from? For most providers that means named local authority commissioning teams and the frameworks or dynamic purchasing systems you are on or applying to. A plan that assumes beds fill themselves is the fastest way to look financially naive.
Then the operational plan, which the regulations tie directly to money. Ofsted expects evidence that you have a service manager and enough staff to support the number of children you intend to accommodate at the start, a recruitment plan for when you grow, and a clear approach to staff turnover and training. The registered service manager must have at least two years of relevant residential support experience, gained within the five years before they apply. Staffing is the largest line in your cashflow, so the operational plan and the financial plan have to tell the same story. If the rota needs eight support workers and the cashflow funds five, the application contradicts itself.
The 12-month cashflow forecast that clears viability
Your cashflow forecast should estimate projected monthly income and expenditure for the first 12 months of operation, month by month. That is the exact standard Ofsted sets, and it is the single most important number document in the pack, because it is where "financially viable" stops being a claim and becomes arithmetic.
Income is placement fee income, and the honest version ramps up rather than starting full. A new three-bed service rarely fills on day one. Model occupancy building over the first few months, at the weekly fee your local authority framework actually pays, and hold a void allowance for the weeks a bed sits empty between placements. An empty bed is the fastest drain on a small service, and a forecast that assumes 100 percent occupancy from month one reads as wishful rather than viable.
Expenditure is dominated by staff. Support worker wages at or above the National Living Wage of £12.71 an hour for 2026/27, employer National Insurance at 15 percent above the £5,000 secondary threshold, pension auto-enrolment, holiday pay, and any waking-night or on-call cover the model needs. Under the rest of the plan you also carry rent or lease costs, utilities, insurance, food and activities, the registration and manager fees, training, and a repairs line. Set against income built up realistically, the forecast should show the month the service turns cash positive and prove you can fund the months before it does.
One line most first-timers miss is working capital for the gap before councils pay. You pay staff weekly or monthly from day one, but a local authority typically settles an invoice 30 to 60 days after placement. Your contingency plan policy, which the regulations require in case the service ever closes, has a financial mirror image: Ofsted wants to see you have the reserves to keep children safe through a wind-down, so a forecast with no buffer undermines two parts of the application at once.
What registration and the wait actually cost you
Registration itself carries three separate charges plus a hidden one, and the hidden one is usually the biggest. Budget for all four before you commit to a lease.
The visible fees come from Ofsted. There is a children's social care registration fee, set by the Department for Education (DfE, the government department that funds and sets fees) and reviewed every year, which depends on the number of premises you register and is non-refundable. There is a separate registration fee for each registered service manager application. And once you are registered, there is an annual fee to stay registered. The current figures are published on GOV.UK for the registration fee and the annual fees for providers, and because they are reviewed yearly you should check them as at the month you apply rather than trusting an old figure. Ofsted also checks whether you owe fees from any previous registration and weighs that against your financial viability, so clear old balances first.
The hidden cost is time. Ofsted's guidance is unusually candid: because of the exceptionally high number of applications, it is likely to be several months before you receive a decision. You cannot accept a placement or invoice a local authority until you are registered, yet rent, insurance and a core team may already be running. That gap is a working capital requirement, not an afterthought, and it is exactly what the cashflow forecast needs to fund. Ofsted began inspecting registered services from September 2024 under its social care common inspection framework, so the finances have to hold up after registration too, not just at the front door.
Company, partnership or individual: the structure decision before you file
Decide your legal structure before you submit the SC1, because the application asks for it and the financial evidence changes with it. Ofsted registers organisations (including companies and limited liability partnerships), partnerships and individual providers, and the documents you attach differ for each.
A limited company is the common route, and it carries a genuine advantage at registration: a newly formed company does not have to submit annual reports or accounts, so a first-time provider is not penalised for having no trading history. You lean on the business plan and the forecast instead. If your company sits under a holding company, though, Ofsted wants the last two years of accounts for the holding company and every subsidiary, sent by email, so a group structure adds paperwork rather than removing it.
Tax then follows the structure. A company pays corporation tax at 19 percent on profits up to £50,000 and 25 percent above £250,000 for 2026/27, with marginal relief between, while a sole trader or partnership pays income tax and National Insurance on the profits personally. Many providers also weigh a community interest company (CIC) for the mission signal it sends to commissioners, though a CIC pays the same tax as an ordinary company and adds an asset lock. None of this changes the care you deliver, but it changes the numbers Ofsted reads and the tax you pay later, which is why it belongs in a short conversation before you file, not after. Our note on tax planning covers the structure trade-off in more depth.
Here is how the three common ways of preparing the financial side of a registration actually compare:
| What registration needs | DIY / template | Generic accountant | LOYALS specialist |
|---|---|---|---|
| Business plan built to Ofsted's four-part structure | ✗ You self-format | ● If asked | ✓ Ofsted-format pack |
| Month-by-month 12-month cashflow forecast | ✗ | ● Annual only | ✓ Monthly, viability-ready |
| Models placement income and a void allowance | ✗ | ✗ | ✓ Built in |
| Prices in the funding gap before councils pay | ✗ | ● | ✓ Working capital mapped |
| Reserves for the contingency and closure plan | ✗ | ✗ | ✓ Evidenced |
| Open Mon to Sat for registration-deadline calls | ✗ | ✗ Mon to Fri 9 to 5 | ✓ 10am to 7pm Mon to Sat |
This is why most new supported accommodation providers get the finance pack built by a specialist rather than lift a template that Ofsted has seen a hundred times.
What this means for you: getting registration-ready
Get the money story straight before anything else moves, because every later step depends on it. The practical sequence is short and most of it is sequencing rather than complexity.
- Fix your model and premises first. Bed count, category of accommodation and the weekly fee your target framework pays. These are the inputs to everything downstream.
- Choose the legal structure and register the entity. Company, partnership or individual, decided with the tax in view, before you touch the SC1.
- Build the business plan to the four-part structure. Background, marketing, financial and operational plan, with the rota and the recruitment plan matching the cashflow.
- Model the 12-month cashflow month by month. Occupancy ramp, void allowance, staff and running costs, and the working capital to cover the wait before councils pay.
- Assemble the documents and check the current fees. Statement of purpose, policies, insurance confirmation, and the DfE registration and annual fees as at the month you apply.
- Submit complete, and plan for the several-month wait. An incomplete application goes to the back of the queue, so complete beats fast every time.
None of this is exotic. It is the difference between an application that reads as a real, funded service and one that reads as a good intention. LOYALS is a King's Cross firm of chartered accountants that prepares the business plan, the 12-month cashflow forecast and the viability statement Ofsted asks for, and then runs the payroll and management accounts once you are trading, so the numbers that got you registered are the same ones that keep you compliant.
Getting a service registration-ready? Our children's home accountants team builds the Ofsted registration financial pack from £950, then runs the payroll, welfare VAT and management accounts once you are trading, so the same firm carries you from application to your first inspection.