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HMRC internal manual

Company Taxation Manual

Tax elected funds (TEFs): application process and effects of entry to the TEF regime: key points about the application process

The application process is covered in regulation 69Z49 SI2006/964.

The application process

In order to become a tax elected fund (TEF), an application must be submitted to HM Revenue and Customs (HMRC) by the manager of an existing authorised investment fund (AIF) or the proposed manager for a future AIF, which must then be approved by HMRC.

Before an existing AIF makes an application, it must obtain any necessary unit holder or shareholder approval that is required under its own rules or by the Financial Services Authority to apply for the TEF regime. Where regulatory authorisation is required, the AIF must also notify HMRC when this has been given.

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Key points to note about the application process

Once a fund has been approved to be a TEF it can subsequently voluntarily leave the regime at anytime (see CTM48971 for further details). If it decides to leave the regime and at a later date wants to re-apply to become a TEF again, the AIF can only do so at the beginning of an accounting period that begins six years after it left the regime, under regulation 69Z49(4)(b) SI2006/964.

If a termination notice is issued by HMRC for the reasons set out in chapter 6 (see CTM48960 onwards), then the AIF will not be able to re-apply to become a TEF at a later date under regulation 69Z49(4)(a) SI2006/964.