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HMRC internal manual

Company Taxation Manual

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

The rules regarding the form and timing of an application are detailed in regulation 69Z50 SI2006/964.

When should a TEF application be received by HMRC?

An application to become a tax elected fund (TEF) must be made in writing to HM Revenue & Customs (HMRC).

  • The application for an existing authorised investment fund (AIF) must be received by HMRC at least 28 days before the beginning of the specified accounting period (AP) (ie from the beginning of the AP in which the TEF regime is to apply).
  • A proposed fund application must be received by HMRC at least 42 days before the date the fund is expected to be established and FSA authorisation is given.

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Timing of applications with a pre-clearance for the genuine diversity of ownership condition

Under regulation 69Z50(8)&(9) SI2006/964 the time limits for the TEF application may be reduced to at least 14 days before the beginning of the specified accounting period for an existing fund, or the time when the proposed fund is established and authorised, if HMRC has given clearance that the genuine diversity of ownership condition (GDO) has been met under regulation 9B SI2006/964 (see CTM48165). However, in this instance the application must certify that there have been no changes in substance between:

  • the form in which the instrument constituting the fund and its prospectus - the fund documentation, which was considered by HMRC before giving the GDO clearance (that is, there is no material change made to the documents that may reasonably cause doubt as to whether the GDO may fail in relation to any accounting period. Hence, any changes to the fund documents that cannot have any impact on whether the GDO is met or not, will not constitute a change in substance in this case); and
  • the form in which it is proposed that those documents will take at the beginning of the specified accounting period (for an existing fund) or the time when the proposed fund is authorised (for a proposed fund).

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The HMRC approval process

Regulation 69Z50(4) SI2006/964 specifies that within 28 days of receipt of an application (or 14 days for applications that have been given a GDO pre-clearance under regulation 9B), HMRC must either:

  • notify the manager (for an existing fund) or proposed manager (for a future fund) that the application is accepted; or
  • issue a refusal notice to reject the application (see CTM48925 for further information).

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Amended applications

An application may be amended at any time before it is accepted but it is then treated as a new application under regulation 69Z50(6) SI2006/964. However in order to give flexibility to correct minor errors or omissions without giving rise to delay, the amended application can take effect from the date stated on the first application, if HMRC are satisfied before that time that the amended application is valid (regulation 69Z50(7) SI2006/964).

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Minor errors or omissions with the application

Where HMRC identifies any minor errors or omissions in an application, then where practicable, HMRC will contact the applicant to give them an opportunity to amend the application appropriately before issuing a refusal notice.

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Withdrawing an application

Under regulation 69Z50(5) SI2006/964, an application may be withdrawn by the manager or proposed manager at any time before it is accepted by HMRC.