Good Afternoon All
I have a new client which is a village Sports Club, Limited company (CIC) limited by guarantee. All members £1 each.
Does the asset lock change what can be distributed to members in a winding up hence the mutual trading argument (and no CT) does not apply.
Thanks
Replies (2)
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There is no difference ...
... between a CIC and any other company for tax purposes. So in theory mutual trading could still apply (though I would have thought that the circumstances in which mutual trading is seen to be for the benefit of the community would be few and far between).
Yes it does, a requirement of mutual trading is that upon dissolution the assets are distributed amongst the members. Any asset lock goes against this concept and creates an indivisble reserve that must be distributed elsewhere.
I don't think it is possible to have a CIC that has mutual trading status (that doesn't mean HMRC won't misunderstand their own rules and allow it)