What is it?
A Community Interest Company (CIC) is a company that has an asset lock, so that its assets cannot be distributed to its members in the event of a winding up. There are also legal limits to the amount of profit that can be paid as dividend. It is a limited liability company, and can be limited either by shares or by guarantee. A CIC structure is commonly used by social enterprises that are not charities, as the asset lock makes funders more confident that the funds will be used for the proper purpose for which they were intended. Also, the CIC’s ability to pay dividends is limited (or non-existent, if limited by guarantee), which sits well with the ethos of social enterprises.
What are the accounting and filing requirements?
- Accounts need to comply with the Companies Act 2006 and the FRSSE.
- Accounts need to be filed at Companies House within 9 months of the year end.
- An Annual Return needs to be filed with Companies House.
- A CIC report must be filed at the same time as the accounts, setting out how the CIC has benefitted the community, among other things.
What are the tax implications?
- Must register for VAT if making taxable supplies over the threshold.
- Must file a corporation tax return. If the activity of the CIC is non-business and philanthropic then it may be possible to get HMRC to make the corporation tax record dormant, so that returns do not need to be filed.
Slade & Cooper services
- Preparation of accounts and accountant’s report
- VAT advice so you know when registration might be necessary, and can deal with any partial exemption and outside the scope issues.
- Corporation tax returns and iXBRL tagging of the accounts
- Payroll bureau
- If taxable activity is insignificant we can help to have the organisation’s tax record made dormant.