Community spirit
Across the UK, the number of community interest companies is growing, as a response to current issues including rising fuel prices and the impact of Covid-19. There is evidence that the pandemic spurred people on to be more community-minded, setting up neighbourhood projects including food banks and retail hubs.
The Annual Report 2020/21 from the Government’s Regulator of Community Interest Companies (CICs) reported that the number of CICs on the register rose by 21% with the regulator approving 6,838 new ones. This compares with 5,100 the previous year and 3,200 the year before.
As Louise Smyth (interim) Regulator of Community Interest Community explains: “CICs have always been adaptable and at the ‘front-line’ of change, meeting public need and adapting to that need as required – indeed proving the true value of the CIC model in delivering community benefits in difficult times. Against the backdrop of the Covid-19 pandemic, we have seen the impact that CICs across the UK have had in dealing with the challenges faced. CICs, now more than ever, are providing vital benefit to communities across the length and breadth of the UK.”
A CIC – which is a hybrid between a charity and a non-profit-making company – can only be registered with the consent of the Community Interest Companies Regulator; the application must comply with CIC legislation as well as the usual rules for registration of a company.
The CIC Regulator has to be satisfied that the proposed company is being set up to benefit the community and that its articles include all the provisions required of a CIC.
Here at Lewis & Co, we have a number of CICs as clients, including food hubs, community shops and cafes, and community exercise groups. Although they are basically treated in a similar way to limited companies, as regards to tax, our support also includes tax planning and management to make sure they aren’t paying more tax than they need to. These CICs don’t have shareholders and any profit they make should be invested back into the project.
Each year, a CIC must submit a return stating what its activities have been and that these have been of community benefit. We can help our clients with that reporting element for Companies House, while also supporting them as they plan ahead.
Some CICs ask us if it’s worth them being a charity but this status does come with more compliance and regulation, as well as the requirement for trustees and AGMs etc. However, there are also benefits. If you’re looking at the pros and cons of both from a finance and business perspective, we can help you with that too.
For more information, do get in touch on 01892 513515 or email: info@lewisandco.biz