An unincorporated association is a legally recognised form of organisation, and the easiest to set up.
It is formed of a number of individuals – who are each responsible for their own tax arrangements, perhaps under self employment – who agree to come together for any common purpose. Relatively straightforward to run, it’s again a good idea to have a written constitution to refer to and, if it’s big enough, a management committee to run it. It will therefore cost nothing to set up.
The individuals in the association make their own rules for running the organisation and set these down in a democratic constitution. These associations are not registered with or regulated by either Companies House or the Financial Services Authority, whic do however regulate companies, charities and co-operatives. You will not need to produce or submit annual returns as each member is responsible for their own tax and accounts.
Unincorporated associations can trade or have other business objectives, or carry on commercial activities, but would be ineligible to apply for funding aimed at more regulated organisations, such as charities. They cannot own property directly, but can own property through a trust.
It is important to note that an unincorporated association has no spearate ‘legal identity’ – meaning there is an unlimited liability on members should anything go wrong. You will have to sign loans, leases and contracts as individuals, and carry the risk of personal liability in case of problems.
Although useful to test out a project and begin to work together, this structure is probably not a long-term solution if you intend to sign contracts, employ people or expand the enterprise.