The Accountant Horror Stories: Why CICs Are Being Overcharged

I’ve been collecting these stories for a while now, and I think it’s time to share some of them.

A CIC founder in Manchester told me their accountant charged them over £1,000 to incorporate the company. All the documents are available online for free. The template articles of association are on the Companies House website. The incorporation process takes about an hour. The accountant charged them more than most CICs spend on their first year’s overhead.

Another CIC was told they needed two sets of accounts prepared — one as a CIC and one as an ordinary limited company. They were quoted double the normal accountancy fee. This is simply wrong. A CIC files the same annual accounts as any other limited company, plus a short CIC report. The CIC report is a single page.

A third example: an accountant treated all grant income as turnover, creating a VAT liability that didn’t exist. The CIC ended up paying thousands in unnecessary tax before the error was spotted.

And then there’s the corporation tax issue. I’ve heard from multiple CICs whose accountants treated all income as subject to corporation tax, charged them for the tax return, and then charged them again to reclaim the corporation tax that shouldn’t have been paid in the first place. Each step generated a fee for the accountant and a cost for the CIC.

I want to be clear: I’m not attacking the accountancy profession. Most accountants are honest professionals doing their best. But the level of basic ignorance about CICs among even well-regarded practitioners is frankly shocking. CICs have only existed for five years. They weren’t taught in any professional qualification. Most accountants have never encountered one before, and many don’t know what they don’t know.

The consequence is that CICs are paying the price for their advisers’ lack of knowledge. I’ve started calling this the “transaction cost of engaging with professionals” — the hidden expense of bad advice that CICs have to absorb just to exist in a system that doesn’t understand them.

We’re developing a CPD module for accountants and professional advisers, working with Heidi Fisher’s team in Birmingham. The goal is simple: standardised, authoritative information about CICs that professionals can access as part of their ongoing training. If an accountant does a CPD module on CICs, they can’t claim they didn’t know.

In the meantime, if you’re a CIC and your accountant tells you something that doesn’t sound right, question it. Push back. And if you’ve got your own horror story, share it. We’re building a knowledge base of real CIC practice, and every example helps us make the case for change.

The CIC model is too important to be undermined by ignorance in the profession.