Charities can form CICs as trading companies or they can work collaboratively with CICs.
Trading subsidiaries
Both CICS and ordinary companies can pass up surpluses to the charitable company via Gift Aid.
Charities forming CICs as trading subsidiaries must comply with the regulatory frameworks for CICs as well as charities
Where a subsidiary trading company is a CIC, profit distribution restrictions would survive disposal and this will affect the possibility of selling the business into the ordinary commercial sector. Otherwise, the issues and factors that need to be taken into account when establishing a trading company as a CIC are the same as for an ordinary company.
For more information on trading, see our publication Trustees, trading and tax (CC35).
Collaboration
Charities can collaborate with other organisations, including CICs, provided they weigh up the risks and benefits. Charity resources used in the collaboration can only be used for the charity’s purposes.
For more information on collaboration, see our publication Collaborative Working and Mergers (CC34).
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ID: 2010