Charity Tax Group working party on 'fit and proper persons'

Legal experts say HMRC proposals will make claiming tax relief more difficult

A Charity Tax Group working party made up of legal experts will meet for the first time this week to discuss a response to new HM Revenue & Customs powers they fear will make claiming tax relief more difficult.

The 'fit and proper person' test for charity trustees and senior employees means that charities must submit information to HMRC about every senior appointment, and allows HMRC to suspend relief if the people appointed do not meet its standards.

The rule was introduced partly to give HMRC a way to prevent charities being used for tax avoidance after it was decided to grant tax relief on charitable donations across borders in the European Union. But the lawyers believe it gives HMRC too much power over the sector and will create red tape.

Nicola Evans, a member of the CTG group and a senior associate at lawyers Bircham Dyson Bell, said the sector had last year negotiated successfully on anti-avoidance legislation concerning substantial donors, and that it could use the same tactics again.

"HMRC responded well to the sector's concerns on that occasion," she said. "We hope to use the same model here. We're aiming for a resolution to this before the next finance bill, which will follow the new g overnment's next Budget."

 

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