CIC Accounts - Asset or Deferred Income?

Tax return - project donations received spent in following year - asset or deferred income?

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We are a very small CIC (annual turnover circa £10k).  All income is from charitable or corporate donations and the majority of funding is project specific.  We don't make any profits as all income is accounted for in each project.  Last year (year end October 31) we had money coming in for a two year project which has been spent in the following year.  So, at year end there was money in the bank (approx £1.5k) which has subsequently been spent on that specific project.  My question is, when completing my micro entity Accounts for HMRC, where does that money go?  Can I show that it is not profit as it is spent in the following accounting year?  Is it an asset which is set off against a creditor?  Is it deferred income?

Many thanks for any advice.

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RLI
By lionofludesch
13th Feb 2020 16:52

As usual, it depends.

If the income has been received conditionally, I'd probably treat it as deferred income. I'd need to study your agreement with the payer.

The fact that your company is a CIC is irrelevant, imho.

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Replying to lionofludesch:
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By NDMI
13th Feb 2020 17:05

Thanks for your advice. Yes, the income was received conditionally for use on the specific project so deferred income sounds the best fit.

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By WhichTyler
13th Feb 2020 17:05

If all your income is donations (and you intend to keep it that way) you should consider becoming a registered charity so that you can benefit from Gift aid. there may be some cost in transitioning, but longer term benefit.

CICs are best used where there is trading activity

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By NDMI
13th Feb 2020 17:13

Thank you for the suggestion.

I think that may be a good way to go. We initially set up as a CIC to allow for us to make some money but it hasn't worked out that way so far!

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Replying to NDMI:
RLI
By lionofludesch
13th Feb 2020 18:33

CIO is currently the usual advice.

It may be easier to close down the CIC and start a CIO, rather than convert.

It depends.

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By WhichTyler
13th Feb 2020 19:02

Agreed, sorry for not making that clear

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