The declaration exists to make sure charitable organisations entitled to charity tax reliefs are managed by individuals who do not misuse the funds received, although investigations by the Charity Commission illustrate governance issues in the charity sector.

The model declaration is for use by 'managers' of a charity, Community Amateur Sports Club (CASC) or other organisation entitled to UK charity tax reliefs. The term 'managers' applies to the trustees of charities, directors of corporate charities, directors of corporate trustees, CASC officials and any other persons having general control and management over the running of the charity or the application of its assets.

The 'fit and proper persons' test is a statutory requirement. The test requires that individuals who are ’managers’ of the charity, CASC or other organisation are ’fit and proper persons’ to be managers of such a body.

An individual is 'a fit and proper person' if they ensure, or are likely to ensure, that charity funds and tax reliefs are used only for charitable purposes.

When a charity notifies HMRC of certain new managers, HMRC crosschecks that person’s details against any information it has and will raise any concerns it has if there is anything to indicate the person may misuse the charity funds and tax reliefs.

An individual manager is not a fit and proper person include where the individual:

• has been involved in tax fraud or other fraudulent behaviour including misrepresentation and/or identity theft;
• HMRC has knowledge of the individual’s involvement in attacks against, or abuse of, tax repayment systems;
• individual has used a tax avoidance scheme featuring charitable reliefs or using a charity to facilitate the avoidance;
• the individual has been involved in designing and /or promoting tax avoidance schemes;
• the individual has been barred from acting as a charity trustee by a charity regulator or Court, or has been disqualified from acting as a company director.

The HMRC guidance states: ‘Just because a person has been barred from acting as a charity trustee or one of the other points above applies, it does not always follow that the charity will not be eligible for tax reliefs’.

The HMRC Fit and proper persons helpsheet and declaration for charities claiming tax relief is available here