Comment by tempfile
7 months ago
Are you claiming that setting up a CIC removes individual liability for wrongdoing? So, I set up a CIC for running forums, with $0 of assets and negligible running costs, then in the event of a fine I'm scot free?
7 months ago
Are you claiming that setting up a CIC removes individual liability for wrongdoing? So, I set up a CIC for running forums, with $0 of assets and negligible running costs, then in the event of a fine I'm scot free?
Yes. A CIC is just a limited company with some additional community interest obligations. You can set up a limited company to shield yourself from liability (i.e: if your website is sued by a user, your personal assets aren't at risk) and only in exceptional cases (where serious lawbreaking is involved) could you be held personally liable.
Rightly or wrongly, limited companies in the UK provide a high degree of protection for wrongdoing. Defrauding HMRC out of hundreds of thousands of pounds and suffering no consequence is happening day in day out. An Ofcom fine is nothing by comparison.
1. Thanks for this very helpful information about how some seemingly quite simple legal manoeuvring can be used to dodge 99% of this law.
2. Doesn't the fact that simple legal manoeuvring can be used to dodge 99% of this law make the law (and laws like it) farcical on its face? Merely an elaborate set of extra hoops that only serves to punish the naive, while increasing everyone's compliance costs?
The law is designed to target large companies that aren't seen as doing enough to prevent harm on the internet. Setting up a CIC doesn't dodge the law, the legal entity (the CIC) remains accountable for conduct on the website. Setting up a CIC removes the risk from the individual website operator because they're no longer operating the website, instead the website is operated by a separate legal entity. The website could still be held accountable for violating the law but the consequence would be the CIC is fined, not the individual behind it. The same principle as any limited liability company.
9 replies →
How would that work if someone set up a CIC, used it to rent a VPS and did some grey-hat hacking activities?
If the person committed a criminal offence under the Computer Misuse Act then they would face criminal sanctions, personally.
The Online safety bill gives Ofcom the power to levy regulatory fines, not criminal sanctions, so is very different
Assuming you regard the cost of keeping and filing accounts and other paperwork, annual registration fees, etc. as negligible yes.
Keeping accounts: cost, depends on if you make any money. If you do then you would have to keep accounts even if not a CIC!
Filing accounts: £15. An online form will ask you for your balance sheet summary only unless you are very large.
One off registration:£65
Annual confirmation statement:£34
So depends on your perspective I suppose.
There are plans to remove the small company p & l exemption and new rules on verifying directors ids. Costs are going up too. It looks like a CIC you can only file online if full accounts. https://find-and-update.company-information.service.gov.uk/a...
You have to keep accounts if a business even if not incorporated. A company has to keep accounts if it has any assets (e.g. a domain) or any financial transactions (e.g. paying for hosting)
You will also probably have to file a tax return. You have to keep a register of shareholders.
In fact if definitely not making a profit a standard ltd might be simpler (or maybe a company limited by guarantee) then a CIC as all a CIC does it add restrictions and extra regulation https://assets.publishing.service.gov.uk/media/5a7b800640f0b...
5 replies →