HM Revenue & Customs head of charity defends 'fit and proper persons' test

Andrew Edwards tells Charity Tax Group the test has been used a number of times to prevent fraud

HM Revenue & Customs
HM Revenue & Customs

The fit and proper persons test has been used to thwart charity fraud a number of times and has not been the subject of a single complaint, Andrew Edwards, head of charity at HM Revenue & Customs, told the annual general meeting of the Charity Tax Group yesterday.

The test, which came into law last year, allows HMRC to deny tax relief to a charity if it feels that a senior employee or trustee is a fraud risk.

The measure has been heavily criticised by charity umbrella groups and lawyers because it means more administration for charities and there is no right of appeal.

Edwards said the test had been used "a number of times" to prevent bogus charities from registering, and "once or twice" when individuals with a history of fraud had taken positions at genuine charities.

"In one case, the trustees were eternally grateful when they learned about the person they had employed," he said.

Edwards also said HMRC had been flooded with Gift Aid applications from bogus charities because "they hope if they make enough applications, a few will slip through".

He said another tactic used by fraudsters to abuse the Gift Aid process involved stealing charities’ identities. "We got one letter on headed notepaper belonging to quite a major charity, telling us that it had changed its bank account," he said. "The fraudsters obviously hoped we wouldn’t notice for a month or two."

A third tactic was to submit false donations as part of work with a genuine charity.

"We’ve seen charities that normally submit applications for a few thousand pounds a year start applying for hundreds of thousands in Gift Aid," he said.

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