The Fit and Proper Persons Test

The newly introduced 'Fit and Proper Persons Test' has created an uproar within the UK charity Sector. The test, which scrutinises the suitability of directors/trustees has come in for scathing criticism. Many charities are understandably worried that they may be caught out by the new scheme and consequently lose their charitable tax status.

The HMRC have gone some way to allaying these concerns by publishing a Questions and Answers guide. The guide stresses that a charity will not automatically lose their charitable tax reliefs if one or more trustees/directors fail the 'fit and proper' test. The HMRC will work with charities to mitigate against such penalties arising.

The Guidance goes on to say that the HMRC approach will depend upon the individual circumstances in each case. It would be hoped that such flexibility would mitigate against the otherwise draconian measures introduced for any failings. Of course on the flip side such an individualistic approach may leave charities with little idea as to what may happen to their status right up until the HMRC makes its decision.