5 ms·

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 runn

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?

aimazon 2y ago
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.
- morkalork 2y ago
  How would that work if someone set up a CIC, used it to rent a VPS and did some grey-hat hacking activities?
  - jimnotgym 2y ago
    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
- deleted 2y ago
  [deleted]
- akoboldfrying 2y ago
  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?
  - aimazon 2y ago
    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.
    - akoboldfrying 2y ago
      >the consequence would be the CIC is fined Does this in practice mean that the original human person would have to pay that fine? What would the consequences likely be for the original human person? If those consequences remain severe, then it's not a simple legal manoeuvre after all. This reduces farcicality, but also means there's no way for an individual to safely run this kind of website. If those consequences round to zero, my next question would be: Can a large company spin up a CIC just to shield itself in the same way? (If so, it seems the farce would be complete.)
      - jimnotgym 2y ago
        In practice the person would not have to pay the fine. The company would. If the company had no cash to pay it then it could be forced into insolvency. No a large company can't spin up a CIC to run a business website (because it is not community interest), but it doesn't need to, it is already a limited liability company. However this is not a farce, the limited liability applies to the shareholders, not the company. The company gets fined, and has to pay the fine or risk having its assets siezed.... then the shareholders have lost their company. The liability of the shareholders is limited to the shareholders invested amount, ie the shareholders can't lose any more than they put in. So if the fine was more than the company can afford, the shareholders lose their company, but don't have to pay the rest. It is not a farce, because losing a profit earning company is bad for a shareholder
graemep 2y ago
Assuming you regard the cost of keeping and filing accounts and other paperwork, annual registration fees, etc. as negligible yes.
- jimnotgym 2y ago
  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.
  - graemep 2y ago
    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/accounts/cic/before-you-start 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/5a7b800640f0b645ba3c4bbc/10-1388-community-interest-companies-benefits-of-a-cic-leaflet.pdf https://assets.publishing.service.gov.uk/media/5a7b800640f0b...
    - jimnotgym 2y ago
      >You have to keep accounts if a business even if not incorporated Indeed, so this cost is not relevant to the decision to set up a CIC or not
      - graemep 2y ago
        It is relevant this case. The thread is about moving an activity that is not a business to a company (and for some reason a CIC in particular). If you did it in your own name you would not have to keep accounts.

aimazon 2y ago

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.

morkalork 2y ago
How would that work if someone set up a CIC, used it to rent a VPS and did some grey-hat hacking activities?
- jimnotgym 2y ago
  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
deleted 2y ago
[deleted]
akoboldfrying 2y ago
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?
- aimazon 2y ago
  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.
  - akoboldfrying 2y ago
    >the consequence would be the CIC is fined Does this in practice mean that the original human person would have to pay that fine? What would the consequences likely be for the original human person? If those consequences remain severe, then it's not a simple legal manoeuvre after all. This reduces farcicality, but also means there's no way for an individual to safely run this kind of website. If those consequences round to zero, my next question would be: Can a large company spin up a CIC just to shield itself in the same way? (If so, it seems the farce would be complete.)
    - jimnotgym 2y ago
      In practice the person would not have to pay the fine. The company would. If the company had no cash to pay it then it could be forced into insolvency. No a large company can't spin up a CIC to run a business website (because it is not community interest), but it doesn't need to, it is already a limited liability company. However this is not a farce, the limited liability applies to the shareholders, not the company. The company gets fined, and has to pay the fine or risk having its assets siezed.... then the shareholders have lost their company. The liability of the shareholders is limited to the shareholders invested amount, ie the shareholders can't lose any more than they put in. So if the fine was more than the company can afford, the shareholders lose their company, but don't have to pay the rest. It is not a farce, because losing a profit earning company is bad for a shareholder

graemep 2y ago

Assuming you regard the cost of keeping and filing accounts and other paperwork, annual registration fees, etc. as negligible yes.

jimnotgym 2y ago
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.
- graemep 2y ago
  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/accounts/cic/before-you-start 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/5a7b800640f0b645ba3c4bbc/10-1388-community-interest-companies-benefits-of-a-cic-leaflet.pdf https://assets.publishing.service.gov.uk/media/5a7b800640f0b...
  - jimnotgym 2y ago
    >You have to keep accounts if a business even if not incorporated Indeed, so this cost is not relevant to the decision to set up a CIC or not
    - graemep 2y ago
      It is relevant this case. The thread is about moving an activity that is not a business to a company (and for some reason a CIC in particular). If you did it in your own name you would not have to keep accounts.