CTM40145 - Particular bodies: clubs: community interest companies

Community Interest Companies (CICs) are a type of limited liability company designed specifically for those who wish to operate for the benefit of the community rather than for the benefit of the company owners (shareholders). A CIC is incorporated under the Companies Act 1985 or the Companies (Northern Ireland) Order 1986 (from 1 October 2009 both will incorporate under Companies Act 2006) and it has to conform to company and insolvency law in the same way as other UK companies (though CICs have their own specific Company Law regime in Part 2 of the Companies (Audit, Investigations and Community Enterprise) Act 2004).

CICs can be companies limited by shares or by guarantee and can be listed companies. They must have an ‘asset lock’ to prevent assets being distributed, e.g. to shareholders, except as permitted by legislation and are also required to satisfy a community interest test. Profits and assets are retained within the CIC for community purposes, but they can also be transferred to another similar organisation such as another CIC or a charity, for example if the CIC is dissolved. A CIC cannot itself have charitable status.

Taxation

As a limited company a CIC is liable to CT just like any other company. It will be chargeable on any trading profits (though it will be a question of fact whether or not a particular CIC is trading) and on its investment income and gains.

It is eligible for any reliefs which are available to all companies but there are no CIC specific tax exemptions/reliefs available.