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who says I'm not fit and proper?

By Stephen Mathews | 21 May 2012

The Finance Act 2010 introduced a requirement that, to qualify as a charity for tax purposes, the charity must meet a ‘management condition’. This condition is satisfied if  all of the charity’s ‘managers’ are ‘fit and proper persons’.  If a charity fails this test then HMRC can refuse or cancel its ‘tax status’; meaning that it will no longer be eligible for charity tax benefits such as Gift Aid.


As this requirement covers the charity’s ‘managers’, it goes beyond the  trustees and may include employees and volunteers.  Broadly, the ‘managers’ are those people who are appointed to positions of trust or influence in the charity and whom are able to exert control or influence over the charity’s finances and tax affairs. HMRC will expect the charity trustees to be able to show, if asked, that they have given proper consideration to the suitability of persons appointed to these positions – i.e. that they are ‘fit and proper’ persons.


No definition of what constitutes ‘fit and proper’ is provided, but HMRC’s criteria goes beyond that applied when looking at whether someone is fit to be a trustee.


Some factors that may lead the HMRC to conclude that a person is not fit and proper if:


  • they have a history of tax fraud;
  • they have a history of other fraudulent activity including misrepresentation and identity theft;
  • HMRC has knowledge of their involvement in attacks against or abuse of tax repayment systems;
  • they are barred from acting as a charity trustee by a charity regulator or Court, or are disqualified from acting as a company director.

It is up to the charity to ensure that managers are fit and proper.  HMRC’s working position is an assumption that the charity has given sufficient and proper consideration to the suitability of their managers.


To assist charities to evidence this process, HMRC has provided a suggested (non mandatory) procedure that charities may wish to follow when appointing trustees and managers.  This takes the form of a basic guide which the prospective manager can read before signing a declaration of their ‘fit and proper’ status. Whilst this may be relatively easy to use in the more formal relationships of a commercial environment, it becomes far more sensitive within the setting of the ‘church family’.


Most church appointments, whether to the role of trustee, manager or worker, are drawn from a pool of people who are quite well-known and whose backgrounds are ‘known’ within the church.  Not many churches that we are aware of make use of the HMRC’s guidelines and declaration, seemingly preferring to rely more on established personal relationships.  There are occasions when charities have found themselves using staff or volunteers with a history that has some ‘bad bits’ which they may or may not know. HMRC may not take a generous view if this happens. This is rare but means this is another area where striking a suitable balance is a delicate task for the charity and its trustees.


More details on HMRC’s fit and proper requirements including the basic guide and a pro forma declaration can be found at .

Posted by Stephen Mathews
Stephen is a Senior Consultant at Stewardship and has spent over 25 years in the accountancy profession. Stephen is a trustee for a number of small Christian charities and has been involved in various church leadership roles for over 20 years.


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