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HMRC internal manual

Company Taxation Manual

Authorised investment funds (AIFs): taxation of funds: introduction

Whilst an Authorised Investment Fund (AIF) can have two different legal forms, that of an Authorised Unit Trust (AUT) or an Open-ended Investment Company (OEIC), it is authorised and regulated in either case by the Financial Conduct Authority (FCA).

In either case an AIF is subject to CT and is treated, for tax purposes, in the same way as a company with investment business (CTM48220).

AUTs are trusts and have trustees who are the legal owners of the investments constituted by the fund and a fund manager who is responsible for managing the invested funds. The investors own units in the fund.

An OEIC is a company incorporated under the provisions of the Financial Services and Markets Act 2000. It is designated by the letters ICVC at the end of its name. These describe its status as an investment company with variable capital. An OEIC must have an authorised corporate director whose role is the same as that of the fund manager for the AUT. An OEIC will also have a depositary to hold the investments on its behalf. The investors own shares in the company.

FCA rules and tax regulations (and these pages) use ‘units’ to refer both to units in an AUT and shares in an OEIC. References to an Authorised Investment Fund (or ‘fund’ in the context of an AIF) refer to either an AUT or an OEIC.

An AIF is regulated by the FCA who have issued rules covering the constitution and management of AIFs. These are set out in the COLL handbook, which can be found on the FCA website at . It is unlikely that network offices will need to refer to the FCA regulations but if they are referred to in correspondence, and if there is any doubt about interpretation, then CTIS (Collective Investment Schemes) should be consulted if advice is required.