Fit and Proper Persons test

The Finance Act 2010 introduced a new definition for tax purposes of charities and other organisations entitled to UK charity tax reliefs. The new definition includes a requirement that to be a charity an organisation must satisfy the 'management condition'. For a charity to satisfy the management condition its managers must be 'fit and proper persons', although there is no definition of this in the legislation.

The loosely defined term has raised concerns about additional levels of regulation and uncertainty for charities, as well as issues regarding the consequences, from a tax perspective, should an organisation cease to meet the conditions.

In February 2011, HMRC published the latest revised guidanceon the fit and proper persons test.

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