Answers
Does a CIC pay corporation tax?, Yes, at 19% to 25% on trading profit. A CIC has no charitable tax exemptions. Genuine unconditional grants are often outside the charge, but the funding agreement decides it.
What is the CIC 34 report and when is it due?, The annual community interest report, filed with the accounts within nine months of the accounting reference date, with a £34 fee. Accounts filed without it are rejected.
Can a CIC pay dividends?, A CIC limited by shares can, capped at 35% of distributable profits. A CIC limited by guarantee cannot pay dividends at all.
When does a charity need an independent examination?, Generally once gross income exceeds £25,000, with audit required above £1m of income, or above £250,000 of income where assets exceed £3.26m.
Why do charities use trading subsidiaries?, Non-primary purpose trading beyond the small exemption is taxable in the charity. A subsidiary trades, pays the charity its profit under gift aid, and the charity receives it tax free.
Should we be a CIC or a charity?, A charity for tax exemptions, gift aid and grant access with unpaid trustees. A CIC for commercial freedom, paid directors and a fast setup. Funding sources usually decide it.