New guidance due for fit and proper persons test

HMRC has promised to produce a more detailed version of the test after calls for clearer definitions


New guidance on the 'fit and proper persons' test will be published next month, according to HM Revenue & Customs.

HMRC has already produced guidance on the test, which says all trustees and senior managers in charities that claim tax relief must be "fit and proper persons".

The initial guidance was published shortly after the introduction of the test in the Finance Act after April's Budget, but HMRC has promised to produce a more detailed version.

Lawyers and accountants who have been consulted by HMRC said they wanted a reduction in the amount of red tape that charities face, as well as clearer definitions of key terms.

"The main things that need to be defined are what a fit and proper person is, which isn't in the Finance Act," said Sam Macdonald, a partner at law firm Farrer & Co. "Another key definition is that of manager, which is defined in the act, but has been interpreted more widely in the initial guidance.

"Charities must also understand what reasonable procedures they should have taken to ensure they complied with this requirement."

Bill Lewis, a tax consultant at law firm Bates, Wells & Braithwaite, which has campaigned to have the test scrapped, said it was another example of excessive, complicated legislation.


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