CIC Association

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Accounts Group

For any accounting related queries, including accounts software package questions, grants and trading income treatment, HMRC or Companies House queries/issues, tax reliefs for CICs, links to useful finance information etc

Members: 177
Latest Activity: Dec 2

Discussion Forum

Completing CT600

Hi - We are setting up a new CIC. It will be quite small scale employing one person part time. Income will be ~ £6/7K. There will be around 260 transactions per year. We want to keep costs down. In…Continue

Started by Pete Scott Nov 28.

Urgent help needed with CT600

Dear all!I run a small CIC with very limited funds. Our numbers are simple and we have calculated a loss for the 2 years we have been running.Last year my family accountant did our accounts and was…Continue

Started by Aaminah Patel Sep 22.

Corporation tax

I am helping a couple of CICs in Bristol and would welcome some help on what is eligible or not for corporation taxEg are donations/fundraising wholely and freely given not liable for tax.What is the…Continue

Started by Jonathan Stephens Sep 3.

Confused with HMRC (Help!) 2 Replies

Hello and thanks for adding me in to the forum. I've set up a very new cic (incorporated last week) and have found lots of useful information and explainations here. Something I've never had to deal…Continue

Started by Hilary Hawkes. Last reply by Mahmood Reza Aug 14.

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Comment by John Mulkerrin on August 14, 2017 at 14:30

Hi Fiona

The position is as it is for normal companies, so very surprised about HMRC response. 

Its generally the detail around your other jobs, do you have an accountant or would like me to recommend one to you?

Comment by Fiona lipscombe on August 9, 2017 at 10:54

Advice please! 

We are a newly formed CIC (started in November 2016) and run a community Festival. This year we covered our costs and have £20,000 extra to pay the 5 Directors. We don’t know whether we can do this on a self-employed basis and invoice the CIC and declare it under our individual self-assessment returns or have to set up a PAYE under the CIC Company.  We all have other jobs and do this part time. The payments will be £10,000 to one Director and £2,500 to the other 4. The jobs the Directors do are as follows:- Overall responsibility for the Festival,  Social media, Entertainment Director, and Technical and Financial Support.

 

There is no guarantee in the future that there will be a payment so as of now this is a one off sum. There is no employment contract or anything in our Articles of Association about Directors payments as we cannot be sure we will have enough money year on year. We are not in a position to pay monthly salaries

 

I’ve contacted the HRMC and various accountants by phone and no one seems to be sure what the position is. Can you help?
Comment by John Mulkerrin on June 20, 2017 at 16:33

@ Jonathan David Griffiths- Definitely can run a Charity and CIC in tandem should you choose (and the issue of business rates and whether your local council will give the CIC discretionary business rate relief could also be an important metric.

In any event if the activity itself is 'charitable' then a CIC can use Localgiving.com as well to accept donations with Gift Aid

Best of luck 

Comment by Jonathan David Griffiths on June 20, 2017 at 16:12

We are not-for-profit organisation who have recently registered as a CIC. Our project is looking to raise funds through donations and private funding to purchase and renovate a building for multiple use. With offers of large personal cash donations plus a cinema club (an entrance fee is charged) we wondered if it would be possible to operate as a Charity and CIC combined so we could get Gift Aid on large donations as well as small supporters fees (which allow discounts into films) ?

Comment by Dean on March 23, 2017 at 22:46

Hello all,

Although not a CIC, I am developing a social enterprise with scope for asset lock. I am searching for an accountant. Someone ideally in Scotland (ideally north) with whom I can build a business relationship with as opposed to a throw away accountant. At present, I am struggling with profit and loss statement, and balance sheet projections. Would anyone be able to offer some help, please?

Comment by Rachel Gardiner-Hill on November 25, 2015 at 13:27

Hi Heidi

That is  massively useful information.  Thanks.

Rachel

Comment by Heidi Fisher on November 25, 2015 at 11:52

Hi Rachel,

Yes Adrian is right about being able to defer grant income to future periods if the expenditure is going to be in the following period.  In terms of corporation tax the rate is 20%.  If you have purchased capital assets then you can claim capital allowances which would reduce the amount of corporation tax due.  The regulator would not be expecting you to show a loss or break even position - this is a misconception around CICs - CICs should be making a profit - otherwise you are always struggling financially and will never have any reserves.  There is a balance to be had between spending the money to reduce your profits and therefore pay less corporation tax, and building up your reserves (which would involve paying more corporation tax) in order to provide some security if you have a drop in income in the future or have unexpected costs.  

The whole point of a CIC is to make profits/surpluses and to use those profits to benefit the community.  This is the key difference between a CIC and a normal limited company - the use of the profits you generate.  

Comment by Rachel Gardiner-Hill on November 24, 2015 at 22:00

Thanks Adrian that's really helpful.

Rachel

Comment by Adrian Ashton on November 24, 2015 at 21:32

corporation tax applies to all declared profits - however, if you're planning on using surpluses to reinvest against costs that you know will be being incurred in the coming financial year, then your accountant should be able to help you present the accounts in this way accordingly on an accruals basis...?

(however, am sure there are proper accounts here that can phrase that far more properly than I can - hopefully Heidi Harris can best advise as she specialises in CIC accounts)

Comment by Rachel Gardiner-Hill on November 24, 2015 at 20:32

Can anyone clarify the situation re CIC's and corporation tax, I absolutely get it that we have to pay it if we generate a profit.  The reason I ask this is because it is likely we will reach our year end with a small surplus that it feels prudent to hold as we may have to move premises next year.  However the impression I get from our accountant is that the regulator would expect that we would only be breaking even or making a loss?

Having always worked in the charity sector I am finding this tension in the CIC model between holding funds and having to spend them pronto before the year end quite difficult.

Also can anyone clarify what rate of corporation tax any surplus might generate, I am talking small here £2k or less.  

Thanks.  Rachel

 

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