Authorised Investment Funds

Authorised Investment Funds are schemes where several investors 'pool' their assets and invest in a professionally managed portfolio.


A collective investment scheme is a form of investment fund that enables a number of investors to ‘pool’ their assets and invest in a professionally managed portfolio of investments, typically gilts, bonds, and quoted equities. Some investments may be in unquoted investments or property. Investors in such schemes are able to spread or reduce the risk that is associated with investment in such assets as well as gain the benefits of professional management. The reduction in risk is achieved because the wide range of investments in a collective investment scheme reduces the effect that any one investment can have on the overall performance of the portfolio.

Authorised Investment Funds (AIF’s)

AIF’s are those collective investment schemes that are regulated by the Financial Conduct Authority (FCA) and have been approved by them under the Financial Services and Markets Act 2000. They take the form of:

  • Authorised Unit Trusts
  • Open-ended Investment Companies
  • Property Authorised Investment Funds
  • Qualified Investor Schemes
  • Tax Elected Funds
  • Authorised Contractual Schemes

Find guidance on the above and Investment Trust companies in the Company Taxation Manual.

HM Revenue and Customs (HMRC) Collective Investment Schemes Centre deal with AIFs.

Certificate of residence requests

A certificate of residence is a certificate that is provided to a UK resident taxpayer where the UK has a Double Taxation Agreement (DTA) with a foreign territory and a person who is a resident of the UK (within the meaning of the DTA) may be entitled to claim relief from certain taxes of that foreign territory (either by way of relief at source or refunds of tax already paid) if certain criteria are met. In order to assess whether a person is entitled to such relief, the overseas fiscal authority receiving the claim will usually require HMRC to certify that the person is a resident of the UK within the meaning of the DTA. Some fiscal authorities may also require HMRC to confirm that the person fulfils other conditions. The certification of residence may need to be made on a specific form produced by the overseas fiscal authority or in a general letter produced by HMRC. Before making a request, please read more about certificates of residence in the HMRC International Manual - INTM162030.

HMRC is only able to issue certificates for countries that they have an agreement with. For more information please see the Double Taxation Relief Manual.

If you’re a Collective Investment Schemes Centre (CISC) customer, and would like to request a certificate of residence please complete the ‘Authorised Investment Funds: certificate of residence request form’ (CISC9) and send it to the Collective Investment Schemes Centre.

Individual taxpayers who require a certificate of residence should apply to their own tax office using an online form. HMRC’s standard turnaround time for dealing with your requests is 15 working days.

Agent authorisation

If you have a tax adviser, agent or accountant acting on your behalf, they must be formally authorised to deal with HMRC. Your tax adviser or accountant can set up this authority using HMRC Online Services - which is quick, easy and secure.

Alternatively, you can complete form ‘Authorising your agent’ (64-8) and post it to the CISC.

New fund set up

If you want a new fund to be set up and a UTR (Unique Taxpayer Reference) issued, please complete a new fund registration form CISC10 and send it by post to the CISC.

It is important to notify the CISC of any change of name, address, agent or trustee/depositary of a fund/company as soon as the change has occurred - and you can do this by email.

Email changes to CISC

If you wish to check that HMRC holds the correct information you can sign up for HMRC’s online service.

Sign up for HMRC’s online services.

Tax returns

Company Tax Returns must be submitted online and any Corporation Tax that’s due paid electronically.

If you have any problems when filing your tax return online please contact the Online Services Helpdesk.

Interest distributions to non-resident investors

UK Income Tax is normally taken off interest distributions paid to investors.

Investors who are beneficially entitled to a share of the investments of an AIF and are not resident in the UK can arrange for interest distributions to be paid with no tax taken off.

This also applies if they are jointly beneficially entitled to a share of the investments of an AIF provided the others, including a company or companies, are not resident in the UK.

Payments of tax

When submitting payments you are advised to use the exact reference contained on the HMRC payslip. When HMRC issues a ‘Notice to deliver a Company Tax Return’ a ‘Payment Reminder’ or a ‘Payment Reminder to an Instalment Payments Payer’ for a particular accounting period these have a payslip attached, which includes a reference that is specific to that accounting period. Also, for form CT61 (Return of Income Tax on company payments), please use the payslip issued with the form.

Failing to use the correct payslip reference causes additional work for both HMRC and fund managers when a payment is misallocated.

Payments can be made by cheque or electronic lodgement. Please make sure you use the correct payslip or quote the payslip number for the accounting period concerned. If you don’t have a payslip for the accounting period, the UTR of the fund should be quoted together with the accounting period in respect of which the payment is to be made in any covering correspondence and on the reverse of any cheque. Please do not use a payslip or payslip reference for a different accounting period.

If a single payment is being made to account for payments due from more than one fund, please make sure that the covering correspondence gives a breakdown of the amount for each fund showing the correct payslip number relating to the accounting period concerned.

If you are uncertain about any aspect of making a payment, please contact the CISC team.

Tax vouchers and consolidated tax vouchers

Nominee account holders that invest an AIF are able to use consolidated tax vouchers. HMRC has a generic voucher template for use in these circumstances, which should be adapted accordingly. Where this template is used there will be no need for nominee account holders to seek prior approval from HMRC that the voucher is acceptable. If the template cannot be adopted for any reason, prior approval of the proposed format of the consolidated tax voucher may be sought from Sandra Whyman or Liz Foster at the CISC.

Advice on ordinary tax vouchers to be used by Authorised Unit Trusts (AUTs) and Unauthorised Unit Trusts (UUTs) can also be obtained from the CISC team.

Applications are usually dealt with in 7 days but in busy periods or at peak times this could take longer for complex applications and queries.

Genuine diversity of ownership

If your AIF wishes to apply to CISC for genuine diversity of ownership clearance you can use the genuine diversity of ownership clearance form CISC5.

Find detailed guidance for AIFs needing clearance in the Company Tax Manual - CTM48155.

Investment Trust companies

Investment Trusts are limited companies with a fixed capital structure incorporated under company law. They invest in a broad range of shares and securities and use professional managers to oversee their investments. So buying shares in investment trusts offers investors one way to diversify their portfolios, spread risk and gain access to this professional management. As limited companies, investment trusts are within the charge to Corporation Tax, but which of their profits are subject to tax in practice depends upon whether they are approved or unapproved.

For periods commencing before 1 January 2012, Investment Trust companies wishing to seek approval under S1158-59 Corporation Tax Act (CTA) 2010 can use form ‘Application for Approval as an Investment Trust’ (CISC8).

Guidance on regulations that allow investment trusts to invest in interest bearing assets without incurring a tax liability can be found in the Company Taxation Manual - 47500 onwards.

For accounting periods commencing 1 January 2012 or later, Investment Trust companies seeking approval under the new scheme (S1158-59 CTA 2010 and Part2 Chapter 1 SI 2011/2999) can use form ‘Application for approval as an Investment Trust’ (CISC8(2012)).

Contacts on technical and procedural issues in relation to Investment Trust companies.

Find general guidance on Investment Trust companies in the Company Taxation Manual.

Property Authorised Investment Funds and Tax Elected Funds

HMRC guidance on Property Authorised Investment Funds (PAIF) is contained in the Company Taxation Manual. For funds wishing to make an application to enter the PAIF regime you can complete and submit form ‘Notice of entry into the Property Authorised Investment Funds regime’ (CISC7).

HMRC guidance on Tax Elected Funds (TEF) and on making an application to enter the TEF regime is also contained in the Company Taxation Manual - CTM48920.

These applications can be made to HMRC by completing and submitting form ‘Application into the Tax Elected Funds regime’ (CISC6).

If you require any help please contact Andrew Marshall of the CISC team.

European Economic Interest Groupings

A European Economic Interest Grouping (EEIG) is an association formed by businesses or enterprises from at least two EU Member States with the aim of encouraging co-operation across national boundaries and between similar businesses. The EEIG is intended to facilitate or develop the business activities of its members and to improve or increase the results of those activities. Its purpose is not to make profits for itself. It may only engage in activities which are:

  • related to the business activities of its members, and
  • not more than ancillary to them (such as research and development and marketing)

An EEIG may not:

  • exercise any power or management over its members’ activities (particularly in the areas of personnel, finance and investment)
  • hold shares in any kind of member’s business (the holding of shares should only be possible to the extent that it is necessary in order to achieve the objects of the grouping and if they are held on behalf of the members)
  • employ more than 500 people
  • make loans to directors of member companies (where the making of such loans would be against the company law of the member state) or get involved in transfer of property between companies and its directors or other associated persons
  • be a member of another EEIG

For information on European Economic Interest Groupings please contact Oliver Paynter of the CISC team.

Authorised Contractual Schemes

An Authorised Contractual Scheme (ACS) is an authorised contractual arrangement to pool assets. It has no legal personality and does not constitute an entity in its own right. It is a form of collective investment scheme.

It is essentially a pool of assets held and managed on behalf of a number of investors (participants) who are the co-owners of the assets.

The scheme has an operator (or manager) who is responsible under the contract for the operation of the scheme. The operator is also responsible for decisions about the investment of participants’ funds in accordance with the contractual arrangements.

The scheme also has a depositary who is responsible for holding and safeguarding the assets of the participants that are part of the scheme. The depositary will acquire and dispose of assets on behalf of the participants on the instructions of the operator.

An ACS is authorised by the Financial Conduct Authority and the operator and depositary must also be FCA authorised persons.


An ACS is not a taxable entity and is not within the charge to direct taxes. Each participant is responsible for tax arising on their own share of income and gains at their own rates of tax (although this works differently for each type of ACS). For this reason an ACS is described as ‘tax-transparent’.

Where stamp taxes are payable on acquisitions then the operator of the ACS will account for these on behalf of the participants. The ACS is exempt from VAT on the costs of fund management.

Read about tax on commission payments (‘rebates’) passed on to investors in Revenue and Customs Brief 04/13.

Published 28 June 2011