Revised guidance on 'fit and proper' persons
New guidance on the fit and proper persons test for managers of charities has been issued.
The guidance replaces the original version published in April 2010 and incorporates significant revisions, in particular on which managers charities or Community Amateur Sports Clubs (CASCs) should notify HM Revenue & Customs (HMRC) about.
The Finance Act 2010 introduced a new definition for tax purposes of charities and other organisations entitled to UK charity tax reliefs, which includes a requirement that to be a charity, an organisation must satisfy the “management condition”.
The new definition applies to Gift Aid with effect from 1 April 2010 and is due to be extended to other charity tax reliefs later this year. It follows that this guidance applies at present only to charities claiming repayments of tax under Gift Aid.
For a charity to satisfy the management condition, its managers must be fit and proper persons. The legislation does not define “fit and proper” and the guidance sets out how HMRC applies this test to those who have the general control and management of the administration of the charity.
HMRC assumes that all people appointed by charities are fit and proper persons unless they hold information to show otherwise. Provided charities take appropriate steps in appointing staff, then they may assume that they meet the management condition at all times unless, exceptionally, they are challenged by HMRC.
However, where HMRC finds a manager of a charity is not a fit and proper person, a charity will not necessarily lose entitlement to the charity tax relief as HMRC can treat a charity as having met the management condition in certain circumstances.
Internet Link: HMRC guidance
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