The fit and proper persons test makes it harder for sham charities and fraudsters working within a charity, or targeting a charity from outside, to abuse charity tax reliefs. It’s not intended as something to deny tax reliefs to charities who make a genuine mistake. Many of the charity tax reliefs work by clawing back tax where the charity hasn’t applied donations or other income or gains for charitable purposes – a ‘look back’ system where tax reliefs and exemptions are given in advance. Where a genuine charity makes a mistake it is usually easy for HMRC to recover the tax due. However where, for example, fraudsters have hijacked a charity or are operating within a charity it may be impossible to recover the tax due. The fit and proper persons test provides for HMRC to exercise its discretion to allow relief even where the fit and proper persons test isn’t met, where a charity can show it made a genuine mistake and there has been no misuse of charity tax reliefs. This guidance is therefore intended to help charities understand how the test works and what they need to do to ensure they don’t lose their tax reliefs.