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: 139
Latest Activity: on Monday

Discussion Forum

Grant funds balance sheet 8 Replies

HiWe are in the process of preparing our year end accounts, prepared by our Treasurer and verified by an accountant not linked to our organisation (as is often required by grant funders) We can not…Continue

Started by Lucie Brooke. Last reply by Lucie Brooke on Monday.

CIC Dormant Company declaration help needed 2 Replies

Would anyone able to give me information how to declare a CIC company dormant for a year? If a company becomes dormant whether administration fees ( company accounts submission fees, accountant fees)…Continue

Started by Subrata Saha. Last reply by Subrata Saha Nov 25.

VAT on solar installation 1 Reply

If our CIC were to get funding for a solar panel installation, would we need to pay VAT and, if so, at what rate? I understand that for a domestic residence it would be 5%, and for a company it would…Continue

Started by Debbie La-Haye. Last reply by John Mulkerrin Nov 16.

What is the simplest accounts format I can use? 2 Replies

I am required to submit our first accounts for a very small CIC, that provides piped spring water to 20 properties. Our income from users contributions for 16/17, was £700 and our outgoings were…Continue

Started by Michael Walton Bell. Last reply by Michael Walton Bell Nov 14.

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Comment by Naresh Rao on November 29, 2017 at 18:13

Hi Jenny

I suggest you ring me on the number I previously provided and I will talk you through this

Naresh

Comment by Jenny Tompsett on November 29, 2017 at 16:46

Thanks Margaret. Yes, we carry forward grant income that spans a financial year as Deferred Income on our balance sheet so OK there. Thanks again

Comment by Margaret Manuell on November 29, 2017 at 16:37

I just want to point out that if you are still holding grant money for a project which spans your financial year, then that is not profit, but moneys or work owing. My suggestion is that Jenny should now go to  the online HMRC free helpline for clarification. 

Comment by Jenny Tompsett on November 29, 2017 at 16:20

Hi Naresh. Thank you for your advice. There does seem to be conflicting treatment out there. In the past, I've  had 2 established firms of accountants tell me that "because the company is Limited by Guarantee we don't have to pay CT except on interest". Also, although it seems to have got lost from this thread, I had another reply just before yours from Margaret whose experience with HMRC was more favourable.  I've copied what she said below. Can you by any chance direct to me to the legislation/HMRC regulations so I can see it in black and white before I open up this can of worms for my organisation ? Many thanks again.

At 20:25 on November 27, 2017, Margaret Manuell said… Hi Jenny, we are a small cic in a similar position. We are not-for-profit, ploughing all surplus back into the company and existing on a mixture of funding, community donations and small sales of craft goods made and donated by volunteers. We asked a company of accountants for help, and they offered to make a submission to HMRC pro bono. The Tax Inspector agreed that the company does not trade in the accepted sense and that we do not have to make returns unless our circumstances change, or if we earn interest on any cash reserves. We were repaid taxes we had paid for the three years previously, before making returns got difficult with online submissions that didn't match what we do. I advise you to approach your local third sector support organisation - they used to be called CVS, but some have set up under different names. They would be able to suggest a local tax accountant who might help you pro bono. Hope this helps. If you want to compare yourself with us, to see how you match, we are at www.shoeboxtheatre.co.uk Good luck.

Comment by Subrata Saha on November 28, 2017 at 10:03

Hi Naresh 

Information regarding  surplus grant and corporation tax you gave to Jenny is very helpful in our case.  I found you give very clear information that easy to understand the relationships between grant and HMRC requirement for tax purposes. I need to have advice on how to declare a CIC company dormant and dealing with financial side. I got your mobile number. Thanks Subrata

 

Comment by Naresh Rao on November 28, 2017 at 0:09

Hi Jenny

CIC's are subject to corporation tax on any surplus they make. The "not for profit issue" relates to needing to reinvest any surplus to the business rather than distribute to shareholders.

If most of your income comes from grant then most should be spent on the projects that the grant was provided for, and so in the long run there is no profit as all the grant is spent.

But in any given accounting period if there is surplus, tax is payable.

I am happy to talk you through this over the phone if it would help.

Naresh Rao

NRL Finance Ltd

offering stress free business solutions to small businesses and especially CICs

M: 07526 716013

Comment by Jenny Tompsett on November 27, 2017 at 18:22

Hi-can anyone advise me on the position of CICs in relation to Corporation Tax ? We are a small Company Limited by Guarantee and we provide educational art facilities. We get the majority of our income from grants but we also charge a subscription for use of our supervised workshop by artists and we charge for art courses many of which are for disadvantaged groups. We do not regard ourselves as "trading with a view to making a profit" although for the last few years we have made small surpluses which add to our reserves and which will in future be ploughed back into our social enterprise objectives. We have had conflicting advice from accountants and I can find no definitive ruling on HMRC's or other websites. The theorists say that we are subject to CT and others say not. Does anyone have first hand knowledge of  HMRC disputing the "not trading with a view to making a profit" argument ? Many thanks in advance

Comment by Fiona lipscombe on August 14, 2017 at 15:09
It is tricky - can you recommend an accountant as the ones we know don't seem to know.
Comment by John Mulkerrin on August 14, 2017 at 14:54

Well, if you have a trawl through all the old discussions on here you will get a lot more detail but in essence roughly the same message. Firstly Its a bit of a tricky area so you should get professional help. 

But, in many circumstances it is possible for CIC Directors to receive payment from a CIC for Non Director activity conducted on behalf of the CIC.

If the individual can show other earnings in these areas of activity that should generally satisfy the rules on being regarded as separate employment to the CIC.

Here's a good previous thread and there are a few if you look back http://cicassoc.ning.com/group/accountsgroup/forum/topics/director-...

Comment by Fiona lipscombe on August 14, 2017 at 14:34
We don't have an accountant as such as we haven't need anyone as yet but have been in touch with 4 and no one seems to know. The CIC regulator has said we can do it by self assessment.
 

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