A CIC is expected to make a profit/surplus whereas a charity is considered as a not for profit which should not profit from the work it carries out. CICs are expected to reinvest their surpluses to do more of their work but can also pay a proportion of this out to the owners or investors.
Is a CIC a charity?
Community interest companies now able to convert into charitable incorporated organisations. for social enterprises. … As CICs cannot be charities, their objects do not have to be exclusively charitable and they are not subject to regulation by the Charity Commission.
Can a CIC make a charitable donation?
CICs are taxed in the same way as normal companies. They are subject to corporation tax and VAT and a CIC that makes donations to charity can deduct this as a charge when calculating its profit for corporation tax purposes.
Is a CIC an exempt charity?
A community interest company (Or CIC) Is not a charity and therefore cannot claim gift aid. This also means an individual cannot claim Gift aid on the Payment. A CIC cannot apply to HMRC for Gift Aid Status.
What is the benefit of being a CIC?
Whilst CICs may generate a profit, the purpose of a CIC is one of community benefit, rather than to maximise a profit for shareholders. CICs are primarily, therefore, not-for-profit entities. Some basic features of a CIC are that: CICs must be a limited company whether by shares or by guarantee.
Can a CIC apply for funding?
Social enterprises, Charitable Incorporated Organisations (CIO) and Community Interest Companies (CIC) are eligible as long as they are not-for-profit or any profit is reinvested in the organisation. This should be clearly stated within the organisation’s governing documents.
How does a CIC make money?
A Community Interest Company (CIC) limited by guarantee with no share capital (CLG) has no shareholders. … CLGs usually raise funds through grants or donations, rather than from shareholders.
Can a CIC pay its directors?
A major advantage of CICs is that their directors can be paid a salary, which means that the founders of the CIC can retain strategic control of the enterprise by sitting on the board as paid directors.
How much tax does a CIC pay?
Unlike a charity, a CIC is not entitled to any specific corporation tax exemptions. Accordingly, a CIC’s profits are fully taxable unless it can be shown that the terms of the contract are such that, in tax law, the organisation does not amount to a taxable trade.
How many directors does a CIC need?
If your CIC is limited by shares, you can only have one director and shareholder. A CIC that is limited by guarantee should have at least two directors or trustees. Depending on the bank or funding body you’re working with, they may require three.
What is the difference between a CIC and a limited company?
A community interest company (CIC) is a non-charitable limited company set up with the purpose of benefiting a community or pursuing a social purpose. This differs to a regular limited company which is set up with the purpose of making a profit for shareholders.
Are CIC VAT registered?
This means the grant and services for the CIC or Charity are an exempt supply and will not count towards the £85,000 threshold, therefore there is no requirement to register for VAT.
Does a CIC have to have an AGM?
There is no requirement for a private company to hold an AGM, though some companies’ articles, drafted when there was a statutory requirement to hold an AGM, will still provide for one to be held. … There is nothing to stop a company to hold an AGM even if it is not required to do so.
Is there a register of CICs?
CICs cannot be registered electronically, paper forms must be used. There is an additional form, a CIC36, required for incorporation of a CIC, which includes the community interest statement.
Can you sell a community interest company? … If your CIC is limited by shares, those shares may be able to be sold on for a profit, but it’s a lot more complicated to ‘sell’ a CIC than a standard company and may not generate the same level of returns.
Can a CIC pay dividends?
CICs are free to operate more “commercially” than charities. For example, CICs limited by shares can pay dividends to shareholders, subject to the 35% dividend cap.