CIC Association

Serving Community Enterprise

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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: 152
Latest Activity: May 17

Discussion Forum

Minimising Corporation Tax - again! their grant in the first 3 Replies

Hello allMy pro-bono CIC client incurred capital spend in their first year when all income was grant funded. They didn't spend all the grant so I used your helpful tip elsewhere to take only the…Continue

Tags: Capital Allowances, CIC, CT600

Started by Paul Johnson. Last reply by Paul Johnson May 17.

Pay, national insurance tax etc. 1 Reply

Really new to all of this so sorry if this all seems obvious. How do i set up paying the directors and how do i set wages. Is it better to set wages low for the first year and the raise them or have…Continue

Started by Brendan. Last reply by Alastair Irvine May 13.

Are Grants Taxable? Am I Trading? 3 Replies

not necessarily. Its complex. Some general principles:- A Grant will start out life as being a taxable receipt of a CIC. Unless you can think of a clever wheeze it will remain taxable. This is the…Continue

Tags: grants, trading, tax

Started by Alastair Irvine. Last reply by Paul Johnson May 13.

Donations and turnover 4 Replies

Canvassing for opinion - aware that donations to CIC's are liable to corporation tax but would a donation to a CIC be subject to VAT.  Opinion given to us suggests that is counted as such but I…Continue

Started by Rachel Gardiner-Hill. Last reply by Rachel Gardiner-Hill Mar 16.

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Comment by Patricia on April 16, 2018 at 11:46

Hello - we are a trading CIC and all surplus profits will be gift aided to our CIO at year end. I understand we have nine months to complete this transfer and just wondered how it should be shown in the accounts ie should we show a nil balance or can we carry forward any accruals?

Comment by Rachel Gardiner-Hill on February 20, 2018 at 17:17

Hi 

Can anyone share their experience of managing reaching the trigger point for VAT registration as a CIC, we hadn't thought we would get to ti this financial year but it's approaching at the speed of an express train and we will have to do it soon.  This is problematic for us as a counselling CIC as it runs counter to our social mission of providing affordable counselling as it will involve a further fees hike increase on the back of one we have just done annually.  We recognise we don't qualify under healthcare professional exemptions but wonder how others have met this challenge.

Comment by Naresh Rao on January 13, 2018 at 17:11

Simon

I specialise in CICs so why don't you ring me to discuss your situation.

If you have very few transactions  the accounts should be relatively simple. Not sure why you accountants are being so slow.

Naresh

NRL Finance

M: 07526 716013

Comment by Simon Odell on January 13, 2018 at 15:42

Hi My CIC has been going a few years and I have had an accountant who was reasonable in dealing with everything. This year they have been rather slow and a bit tetchy when I have asked about progress quoting new complexities - but my CIC probably has only about a dozen in/out transactons!. I am now rather anxious about contacting again but I have for a few weeks now been worried that they are not going to complete the submission nor let me know in time to find someone else. Submission is due by April. How  long should I leave them to complete before finding someone else? And is there a thread on this group which talks about recommended accountants? (I can't see a search button)

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

 

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