Brand: SM Pride application for status could affect lobbying for tax reliefs, warns City lawyer

Community interest companies (CICs) are in danger of being 'brought into disrepute' by a sadomasochist group that offers a legal referral service to its members, the solicitor who masterminded the new legal structure warned this week.


Stephen Lloyd, a partner at City firm Bates Wells & Braithwaite, said an application by SM Pride for CIC status could jeopardise any future chances of negotiating tax relief for such companies.


Mr Lloyd said: 'I have to say that when I devised this idea, it never crossed my mind that people would think sado-masochism contributed to community benefit.


'What goes on in private is of course up to consenting adults, but it is an entirely behind-closed-doors activity and that is where it should stay.


'There is a danger that it will lower the reputation of the CIC brand. In particular, the social enterprise world has a shopping list of tax reliefs it seeks for future CICs. If an S&M group gets registered, this could make the lobbying much more difficult, if not insuperable.'


He added: 'CICs are meant for organisations that are set up for public benefit, and concerned with the community. SM Pride is about a private community, not a public benefit. This is for the regulator to decide, but if I were advising him I would advise against it.'


A spokeswoman for SM Pride said: 'SM Pride has applied for CIC status in the same way that any other community group or social enterprise is entitled to do. SM Pride's management team believes that the level of interest in our application is purely due to prejudice against the subject matter.


'We appreciate that our community's activities are not to everyone's taste. However, SM Pride's remit is to deliver effective support and legal referral services to our community, and therefore is no different to any other organisation delivering similar services. Our community's needs are no less valid when their human rights are challenged or they feel discriminated against at work and in family, legal and health matters simply because of their private sexual preferences.'


She added: 'SM Pride simply wishes to continue to provide a necessary service to our community - 'community' as defined within the CIC regulations - and would prefer to do so within a recognised, accountable and transparent structure.'


CICs were introduced in July by the Companies (Audit, Investigations and Community Enterprise) Act 2004. The structure was deigned to enable organisations to 'lock in' their organisation's public purpose so that assets and profits can only be used for the community interest rather than personal gain.


Some 20 organisations have applied for CIC status since July, and nine have been registered so far, including a childcare organisation, a community transport company and a waste company.


Applications are made to the CIC regulator, with a right of appeal to an appeal officer if the application is rejected.