The following Tax guidance note Produced in partnership with Martin Shah of Simmons & Simmons LLP provides comprehensive and up to date legal information covering:
A tax elected fund (TEF) is an authorised investment fund (AIF) that meets certain conditions and whose application to be treated as a TEF is accepted by HMRC.
For more detail on the general rules that apply to the taxation of AIFs, see Practice Note: AIFs—taxation of the scheme.
Other aspects of the AIF regime are covered in our Practice Notes:
AIFs—genuine diversity of ownership
AIFs—taxation of corporate participants, and
AIFs—taxation of individual participants
For more on the types of collective investment schemes (CIS), (authorised unit trusts (AUT) and open-ended investment companies (OEIC) in particular) that can benefit from the special tax AIF regime, see Practice Note: Authorised investment funds—defined.
References in this Practice Note to the AIF Regulations are to the Authorised Investment Funds (Tax) Regulations 2006 (SI 2006/964), as amended.
To be a TEF, an AIF must meet four conditions (referred to as the 'TEF conditions') in respect of an accounting period:
the property condition—broadly that the AIF does not have a UK property business or an overseas property business
the genuine diversity of ownership condition—ie the AIF is ‘genuinely diversely owned’ (GDO)
the loan creditor condition—broadly three sub-conditions (Conditions A, B, C) that require that any loan relationships to which the AIF is party as a debtor do not provide for an excessive return or
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