I would be interested to read peoples comments on the new community interest company. I have read some of the regulators guidance and find myself confused as to what purpose they are intended to serve. The only advantage appears to be that dividends are payable,unlike a company limited by guarantee, or am I missing something>
William Everatt
Replies (4)
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The clue is in the name..
They are for the use of people who want to conduct a business or other activity for community benefit, and not purely for private advantage.
Unless I am mistaken, they are limited by guarantee and cannot therefore pay dividends.
...having reviewed the situation...
...in some depth last year for a new client that was a genuine "halfway house" type of scenario, and thought that the CIC would be a useful vehicle, and provide some tax breaks.
But, critically :
(i) there is no difference between a CIC and an ordinary company for CT purposes
(ii) dividends can be paid, but there are restrictions.
To be honest, it struck me that as a "third way" (not a "tooth and claw" capitalist commercial company, and not a charity) the sad underlying reality is that CICs are a non-event.
If you read the regulator gumpf carefully, it will become apparent that it is mainly smoke and mirrors, and little substance.
A lot of effort and money for not much, in the final analysis. It might make some people feel better, but ........
Not quite
My understanding is that a CIC is sort of a halfway house between a commercial company and a charity.
The asset lock on a CIC is controlled by regulations, and therefore allows a CIC to be any of the company types - including Limited by shares.
Primarily the CIC is there so that charities can trade, but in a way that is guaranteed by law to be in the interest of the community.
See http://www.companieshouse.gov.uk/promotional/cics.shtml
NeilW