Charity – 'fit and proper persons' test

HMRC have issued revised guidance on the 'fit and proper persons' test - replacing earlier guidance issued in April 2010.

This guidance is relevant to trustees of charities and directors of corporate charities. It also applies to employees of charities and volunteers who either themselves act on behalf of a charity or are involved in appointing people to act on behalf of a charity. In this context the focus is on those who exert control over spending the charity’s funds and/or in claiming tax reliefs on behalf of the charity.

The new guidance incorporates significant revisions, in particular with regards which managers a charity should notify HMRC about.  For a charity to satisfy the management condition, its managers must be 'fit and proper' persons. There is no definition in the legislation of a fit and proper person and this guidance provides further information to help answer the following questions:

• Why introduce the fit and proper persons test?
• Who does the fit and proper persons test apply to?
• What is the fit and proper persons test about?
• What happens if a manager is not a fit and proper person?
• When will HMRC consider a manager cannot influence the charitable purposes of the charity or the application of its funds?
• When will HMRC consider the circumstances are such that it is just and reasonable to treat the management condition as being met?
• What happens if the management condition is not satisfied?
• How will HMRC apply the fit and proper persons test?
• What should charities do to comply with the fit and proper persons test?
• Suggested procedure for charities when they appoint new managers
• When does a charity need to tell HMRC about its managers?