IFM06230 - 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 of 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).

  • Existing authorised investment fund (AIF): The application must be received by HMRC at least 28 days before the beginning of the specified accounting period in which the TEF regime is to apply.
  • New AIF: 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.

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

Under regulation 69Z50(8)&(9) of SI2006/964, if HMRC has given clearance that the genuine diversity of ownership condition (GDO) has been met (see IFM17000) then the time limits for the TEF application may be reduced to at least 14 days before either the beginning of the specified accounting period for an existing fund or the time when the proposed fund is established and authorised (respectively). In this instance the application must certify that there have been no changes in substance in the fund and its constituting documents since HMRC gave the GDO clearance.

The HMRC approval process

Regulation 69Z50(4) of SI2006/964 specifies that within 28 days of receipt of an application (or 14 days for applications that have been given GDO clearance as above), 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 IFM06250 for further information).

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) of SI2006/964. To give flexibility to correct minor errors or omissions, 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) of SI2006/964).

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 as appropriate.

Withdrawing an application

Under regulation 69Z50(5) of SI2006/964 an application may be withdrawn by the manager or proposed manager at any time before it is accepted by HMRC.