HM Revenue & Customs (HMRC) has introduced a new definition for charities and other organisations (including Community Amateur Sports Clubs [CASCs]) who are entitled to UK charity tax relief in the 2010 Finance Act. There is a requirement that organisations must satisfy certain “management conditions” in order to be recognised as a charity by HMRC. One condition is that the organisation must be deemed by HMRC to be managed by “fit and proper persons”. Guidance can be obtained at: www.hmrc.gov.uk/charities/guidancenotes/chapter2/fp-persons-test.htm.

In practice, the charity trustees will be expected to demonstrate that they have considered whether managers appointed are fit and proper persons. It is recommended that trustees, directors and managers appointed after 5 April 2010 complete a Fit and Proper Declaration Form. Trustees may also consider whether such a form should be completed by existing trustees, directors and managers.

It is evident that HMRC is reviewing the charitable status of entities which are claiming UK charity tax reliefs. We have recently had an application for charity status by a CASC refused on the grounds that membership of the CASC was not available to all, as the club rules required a proposer and seconder.

If you do require a charitable status review, then please contact charities@menzies.co.uk.

This article is taken from the Autumn 2010 issue of the Charities Insight.