‘Fit & Proper Persons’ Requirement for Charity Status

In her third blog for Trustee Week, our Head of Charities, Jenny Simpson, revisits her thoughts on the most common governance issues seen in charities.  First published in 2018 the issues remain the same today;

The Finance Act 2010 introduced a new requirement for charities to be run by ‘Fit & Proper Persons’ in order to enjoy status as a charity for tax purposes and therefore be eligible for the tax reliefs afforded to charities. Even in 2022 the requirement is still relatively little known and so, many new clients we come across have not taken the simple steps necessary to prove they are run by Fit & Proper Persons which would protect their tax status.

Interestingly there is no definition of a Fit & Proper Person in the legislation, but HMRC assumes that all persons appointed to the general control and management of a charity are fit and proper persons unless they have information to the contrary. ‘Persons having the general control and management of a charity’ is not restricted to just the Trustees but will include management as well. Full details of who is covered can be found in the government’s guidance here.

Provided charities take appropriate action on appointing personnel then they can assume they are run by fit and proper persons unless HMRC indicate they have concerns to the contrary. Charities therefore need to make sure they hold a declaration completed by all current relevant persons and anyone appointed in the future. HMRC have provided a model declaration which can be downloaded here.

If all relevant persons are able to sign the declaration, then the charity need take no further action, they can assume they are run by Fit and proper persons. Thankfully there is no need to get the declarations updated on an annual basis.

This blog is intended as a general overview and discussion of the subjects dealt with. It is not intended to be, and should not be used as a substitute for taking professional advice in any specific situation. Wylie & Bisset LLP (and its subsidiary Wylie & Bisset (Audit) Limited) will accept no responsibility for any actions taken or not taken on the basis of this blog. If you would like further advice or would like to discuss any of the issues raised in the blog then please get in touch with your regular Wylie & Bisset contact or use the contact form on our website.

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