The idea of setting up a Community Interest Company (CIC) is a very noble one. In fact, it’s becoming an increasingly popular choice for may organisations. 

However, there are some questions that you must ask before embarking on this journey. When you’re done here, why not check out our short article on things you should do before setting up a CIC. But for now, let’s get into the must-do’s.

Who are the Regulators and Authorities?

The requirements are designed and monitored by the various authorities. Without knowing who they are, it would be almost impossible to meet their conditions, which puts you at risk of falling foul of their rules. Breaches in rules could mean you (as a CIC director) or the CIC itself can be fined, struck off or (at the very worst) imprisoned. We don’t want that. So be sure to know who the key players are. 

Three that you must be aware of are: 

✅ Companies House: A CIC is still a form of limited company and so must meet the expectations of Companies House

✅ The Office of the Regulator of Community Interest Companies (ORCIC): This is the specific regulator for CICs in the UK

✅ HMRC: This is the tax authority for all relevant individuals and businesses in the UK. And yes, CICs are still liable to pay taxes like any ‘normal’ company

What are the Requirements and Regulations?

This part here will vary depending on what sector your CIC operates in, as well as what activities it actually carries out. Let’s explore two separate lists – the first covers the mandatory regulations for all CICs and the second covers potential requirements that you will want to be aware of.

Mandatory Requirements

✅ Submit a Confirmation Statement to Companies House annually

✅ Prepare and submit a compliant set of financial accounts to Companies House and HMRC annually

✅ Complete and send a CIC34 Annual Return form to the ORCIC annually

Possible Requirements

✅ Register as an employer with HMRC and make PAYE submissions: This will be required if you intend to pay yourself or someone else from the CIC

✅ Hold valid business insurance to cover your activities: This is needed for certain industries such as those that deal with children or if you will offer some sort of advisory services

What are the restrictions placed on a CIC?

Now the answer to this question is not all that simple so you may need to seek advice from a professional. However, there is also plenty of information produced by the ORCIC and other relevant authorities if you have the time and willpower to get through those. 

The only risk is in interpretation of what you read, which is why professional help before you set up could save you from a lot of pain later down the road.

In essence though, a CIC is just like any other company. However, there are separate restrictions placed upon CICs by the regulator. Three of the common ones are:

✅ The Community Interest Test

✅ The Asset Lock

✅ The Dividend Cap

We have written separate articles on each of these so feel free to check those out.

What is a CIC36 Form?

The CIC36 form is provided by the ORCIC and is free to download from their website. It’s only a 4-5 page word document but asks some questions that you will want to consider, including:

✅ Identifying which part of a community will the CIC actually benefit

✅ Defining how that part of the community benefit

✅ Providing examples of the types of activities that the CIC will perform

Completion of this form is mandatory for CICs and the ORCIC must be satisfied with the responses, so try to be as clear and specific as you can to avoid your application being delayed or rejected – yes, a handful of CIC36 forms do get rejected each year where the regulator is not satisfied.