Community interest company accounts explained

A CIC files ordinary company accounts under FRS 102 Section 1A, or FRS 105 where it qualifies as a micro-entity, plus the CIC 34 community interest report and the £34 fee, within nine months of the accounting reference date.

CICs are not charities, so the Charities SORP does not apply. That said, many CICs voluntarily present fund information because funders expect it.

Grant income that is a genuine donation towards your objects, with no supply in return, is generally outside the scope of VAT and often outside the charge to corporation tax. Funding that requires you to deliver specified services to the funder is consideration for a supply and is taxable income.

The agreement decides it, not the label. We read the funding terms before the income is posted, because reclassifying it after the accounts are filed is far harder.

Where funding can only be spent on a specified project, track it as a restricted fund with its own income and expenditure, even though company accounts do not require the presentation. It makes funder reports reconcile to the statutory figures instead of contradicting them.

Carrying unspent restricted funding across a year end is normal; showing it as free reserves is not.

Trading profit is taxed at 19% up to £50,000 and 25% above £250,000 with marginal relief between. There is no exemption for social purpose.

Reasonable director salaries are deductible, as is genuine expenditure on the community activity. What is not deductible is anything the asset lock would prohibit in the first place.