We spoke to Ceri Witchard, Regulator of Community Interest Companies, about the new online accounts filing service for CICs.
Gary Townley: Hello and welcome to a Companies House podcast. Thank you for downloading, or listening to this wherever you are. My name is Gary Townley. I'm part of the communications team here at Companies House. For those of you that don't know, Companies House is the agency responsible for registering and dissolving companies, collecting company information and making that information available to the public. We are sponsored by BEIS, that is, the Department for Business, Enterprise and Industrial Strategy. We have 4 offices based all around the country. So one in Belfast, one in Cardiff, one in London and the other one, which I'm trying to think of now I can't think of, but it’ll come to me in a bit.
So a slightly different podcast today, in that I'm joined by Ceri Whitchard, who’s the Regulator of Community Interest Companies. We're going to be talking this morning about account filing online, which is a new service that is being introduced fairly shortly, I believe, so hi Ceri, would you like to introduce yourself and tell us a little bit about what a community interest company is?
Ceri Witchard: Yeah. Hi Gary, and thanks for having me here today. So community interest companies, or CICs, are social enterprises. So they were created in 2005 to give people a way of running a business, where they can get paid and can pay their staff but with a community benefit at its heart. So they're not charities, they are businesses, but they're set up to benefit particular groups of people or something in their community. And essentially they’re ordinary companies. They have to comply with all of the company law rules as well as some extra requirements for being CICs. They can be limited by shares, or by guarantee, and we’ve even got some on the record that are PLCs.
My office is responsible for regulating them. We check that when they set up they are genuinely going to deliver a benefit for a company and just keep a bit of a track that's going well and if we do get any complaints, we don't get very many, we do investigate just to make sure that people are doing what they say they're doing.
GT: Okay that’s great. Just the last office is in Edinburgh for anyone who's interested in that. So where is the community interest regulator based?
CW: So we're based in Cardiff. We have a small office within the Companies House building in Cardiff, which is really good for us because we obviously work closely with the teams there, including developing online services.
GT: Okay, so very much like a normal limited company do CICS have to file accounts annually?
CW: They do and it's really important that they remember this. You must file your accounts, even if your dormant, the same as any other company. And if you're a CIC, because you've got this special regulation around you alongside your accounts, you have to file your community interest report and the fee of 15 pounds.
GT: Okay. So ordinary limited companies have been able to file online for quite a while now. So why has this been produced for CICs and why is it a good option?
CW: It’s a really good option for CICs and we've been trying for a while to make sure they can benefit from the same range of services that any other company can have. As I said for a community interest company, you have to have your extra report and pay the fees. So we had to make sure all of that worked well. One of the main benefits is, we see an awful lot of CICs, they file their accounts with Companies House and they forget to attach that benefit report or to attach the fee. They come in by post, they then get rejected. It takes time for them to then meet the requirement and then they're getting a late filing penalty which obviously we don't want it's distracting them, it's an annoyance and it means they're not delivering their benefit while they're sorting all that out. We can avoid all of that with an online service. It's a much better option for our companies.
GT: Yeah. The late filing penalty comes in almost immediately. So it's not optional.
CW: No it's not optional.
GT: Even if you’re a day late.
CW: A day late it kicks in and we do get people contact us but we don't have any powers to just say oh, well, you're a community interest company, don't worry about it. Unfortunately in law if you're late you're late and the penalty applies.
GT: Now does this mean that any CIC company can file?
CW: Most of them will be able to. In fact the vast majority. If you can file small accounts and most of our CICs are in that category, you'll be able to file online from now on. There are a couple of criteria for that. Your turn over being no more than 10.2 million and a balance sheet no more than 5.1 million, very precise figures there, and an average number of less than 50 employees and you only have to meet 2 of those criteria and then you can file online. The majority of our CICs can take the service up so we're hoping to get a really high up take.
GT: Okay. Can you do it yourself or would you need an accountant to do this?
CW: You can do it yourself. We've designed it with Companies House alongside all their other services. They've tested it with users to make sure it's easy, takes you step-by-step and as long as you've got your accounts ready to go, you'll be able to use this service.
GT: Okay, I think you mentioned a few of the benefits, but are there any other benefits to being able to file online?
CW: Yeah, I mean, it's quicker. You'll get a receipt immediately letting you know that they've arrived, you can do it 24 hours a day. A lot of companies, you know, they're busy all day doing their work and they actually want to file their accounts in the evening. It's there for you and you'll get something come straight back saying here it is. You can make your payment online so it’s easier to see where your money is going in and out. So it's just a much slicker system, much easier for people.
GT: And 24 hours a day.
CW: 24 hours.
GT: Absolutely. Now you said the majority of companies can do this online. Are there any exclusions?
CW: There are a few. So if you're one of those larger or medium-sized CICs and we have a few at the moment, you won't be able to use this service. There are some technical bits and pieces. The system will tell you if you can't do these things. You can't change the date of accounts that were made up to, that option won't be there. You can't include a balance sheet that includes a revaluation reserve or an intangible asset, but to be honest, these are small numbers of CICs that will apply for that sort of service and we are working with Companies House and we'll be plugging those gaps.
GT: So there are around 4.2 million companies on the actual Companies House register, how many of them would be CICS?
CW: So there are about 17,000 at the moment. It is growing. It's still a fairly small field in comparison with other entity types, but when they first set up we were only expecting to get sort of 200 or so a year. Now we'll get more than that every month applying. So there's a lot of interest in this area.
GT: Okay, so if I'm thinking of now filing my accounts online, what does the service look like? What does it consist of?
CW: So when you file online, you'll need to have your balance sheet. You can add notes and most importantly that community benefit report that you need to attach. And it will tell you to attach it. So there's no way you'll miss it. CICs always need to have that balance sheet. They always need to have their annual report. When you put it in, things that you do have to do for the CIC, you have to just outline what you've delivered for the benefit of your community. And that's a really important key feature. It's about the transparency to your stakeholders and the public that you're delivering what you say you will and for me and my office, it’s what we use to assess that you are performing in the way you've set up to perform. The other thing you need to tell us is the remuneration for your directors. That is an extra requirement for CICs. You don't have to for other companies, but either it has to be in your account or in that annual report. There's nothing wrong with paying directors. You're supposed to pay them but it does have to be reasonable to make sure that community benefit is there.
GT: Okay and this information is available to look at on the register?
CW: Yes, it will all go on the public register that's part of the transparency. It's important to remember that, so we do have people, make sure you don't put you know phone numbers or personal details of that sort because whatever you put in that report will go on register.
GT: Okay, so just to summarise that then, the online filing for CI accounts is going to be faster. It's going to reduce errors. I suppose it's the same as a normal company in that it won't let you go to the next page unless you fill certain fields in. Yep. So that's good that will lead to less rejections I suppose and also those late filing penalties that everybody doesn't want to pay will be lessened. So obviously it's going to be accessible at all times or 24 hours a day, depending on the system. Online payment, can you pay online?
CW: Yeah you can pay online. It’s a really slick end-to-end service and it really guides you through step-by-step.
GT: Okay, and it gets rid of that paper as well doesn't it? So saves the environment somewhat, for all those paper documents coming in. So it's streamlining the process. How can people get further information about how you use a service?
CW: So if you want to find out more there's plenty of information on our website. We're on the gov.uk website so if you search for CIC regulator, you'll find plenty of information on this. There's some blogs, some step through guides, and follow us on Twitter @CICregulator and my office here, you can always contact us if you really need some help but there's plenty of online guidance and the service really is so straightforward to use, just go and try it. If you have any feedback please do send it. We're always looking to improve.
GT: I visited the CIC regulator website. There's lots of case studies on there, lots of useful information. Again, you can visit our website www.gov.uk/companieshouse. Again, lots of information, blogs, podcasts and everything available for you to use there. So thank you very much Ceri for letting us know about this new service. Obviously people will use it from when it becomes available, I think it's next week. I hope everyone's found this useful. Thank you for listening and listen in again for future podcasts and also sign up to get regular updates from us. So thank you for listening.