End of year return for CIC

Clarkie73

Hi, my wife incorporated a CIC on 28 June 2019. She received a grant of about £8,000, then there were only three transactions for period to 31st June 2020. 1 payment to Zoom, 1 payment to a small supplier of arts & crafts and the other to someone hosting a webinar. Everything then went quite due to Covid. I believe the 21 months for her first set of accounts are due end of March this year (2021). Would the remainder of the grant money be liable for corporation tax? I have looked on loads of difference sites and books but cannot get a definitive answer.

phoenixd

You have to cautious with this. Here are your options:

1. If the grant had/has terms attached to it eg for a specific project and obviously still unused, you may want to allocate it to the B/S as deferred income, hence it's off the P/L and can be put against specific expenses in later years.

2. If it's a 'general' grant that happens to exceed 'general' expenditure for whatever reason(s), it goes on P/L, and corporation tax may be payable. Note that this may not be a total write-off as the following year, expenditure may exceed income, resulting in a loss.

I always remind CIC owners to check their accounts regularly to minimise the occurence of situation 2 above.

Clarkie73

Thank you, that is a great help.