Non-Spectrum SPVs

When did we first hear of them?

Didn't find your answer?

"nothing to do with a possible answer, but does anyone else get cheesed off with the whole SPV thing....your companies not special, its not treated any differently to any other ITS JUST A COMPANY"

Following on from sonoftwosheds' quote above, does anyone remember when and why SPVs became a fashionable thing?  At first, I did think they were some new type of entity that I'd not heard of.  Were they something to do with Gordon's £10000 "personal allowance" for companies?  I can see that sticking a property in a company and getting £10000 of tax free rent income might seem attractive to folk who don't look further forward than the next budget.

Or was it something else?

And - yes - it does cheese me off.   And I've still no idea why they're called SPVs as though they're different to ordinary companies.

Replies (24)

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By Ruddles
26th Feb 2024 18:35

lionofludesch wrote:
 And I've still no idea why they're called SPVs as though they're different to ordinary companies.

As I suggested elsewhere, perhaps if you replace "Special" with "Specific" all will become clear. In other words, you appear to be overlooking the "P" between "S" and "V".

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Replying to Ruddles:
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By FactChecker
26th Feb 2024 19:50

... or even replaced with "Single".

Personally I've never understood the attraction of using "Special" like this ... ever since, at a parents-evening, I overheard the mother of the infamous classroom disruptor saying proudly, "See, I told you John was clever ... the school's putting him in a group with special needs".

[Apologies if that offends anyone ... the 'dig' is at the mother not the child.]

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Replying to FactChecker:
By Ruddles
26th Feb 2024 20:06

Single, sole, whatever ...

Point is that there is a tendency (and I have no idea why) to attribute the "special" (or whatever) to the company rather than to the purpose for which the company exists. [Special purpose] vehicle makes a lot more sense to me than special [purpose vehicle]. But then, as I've already said, folks don't seem to understand what 'special purpose' means.

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By JCresswellTax
29th Feb 2024 18:32

Can see that comment getting removed, like every third one of mine.

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By Wanderer
26th Feb 2024 18:44

https://www.drakemortgages.co.uk/knowledge/what-is-a-special-purpose-veh...

Quote:
What’s the difference between an SPV and a Ltd Company?
Not much actually.

A Special Purpose Vehicle is a single purpose company, in this instance being created for the sole purpose of buying and holding property for investment purposes.

The options you have regarding shareholders and directors are the same, as are the obligations required from Companies House.

"Not much actually." emphasizes your point.
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By carnmores
26th Feb 2024 18:47

its all Bull5hit

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RLI
By lionofludesch
26th Feb 2024 18:53

If they're made available for private use, are they treated as cars or vans?

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Routemaster image
By tom123
26th Feb 2024 19:04

They sound more glamourous for the promoters to sell. Not just a "dull" company that your "compliance" accountant would provide?

I'm a little worried a friend of mine is currently sucked into one of these schemes. He mentioned SPV to me - I probably looked a bit vacant..

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Replying to tom123:
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By Leywood
26th Feb 2024 20:44

tom123 wrote:

They sound more glamourous for the promoters to sell. Not just a "dull" company that your "compliance" accountant would provide?

Also more glamorous to the MDTP, which is why we see it so often on here from the great unwashed

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By taxdigital
26th Feb 2024 19:10

I would blame Putin, and to some extent Ms Truss, for this. The Ukraine adventure led to inflationary pressures whilst a bit of casino economics from Ms Truss forced BOE to raise interest rates breaking all peacetime records. The BTL property market (owned by individuals) got hit. Finance cost restriction (at 7.75% mortgage interest) + stealth taxes (e.g. no change to personal allowance) started eating into disposable income. Mortgage advisers took charge advising folk to incorporate property SPVs with specific SIC codes! Accountants got busy incorporating property businesses, hence the AWeb traffic!

Meanwhile the world has moved on and are creating SPACs!
https://hbr.org/2021/07/spacs-what-you-need-to-know

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By Ruddles
26th Feb 2024 19:29

I have no problem with the term itself. The issue is that has become a catch-all description for any company set up for different purposes to the original. Eg owner of a trading company decides to invest in property so sets up a subsidiary for this purpose. He (or rather his accountant) calls it an SPV, as if investing in property is in some way 'special'.

Contrast the property developer who carries out each development in a separate trading subsidiary set up specifically for that individual development, in order to ring-fence risk etc, and which subsidiaries will be dissolved on completion of each project. To me, I see absolutely nowt wrong with describing each sub as an SPV, since that is exactly what it is - on the basis that 'special' is used in the sense of 'singular', 'sole', 'specific' etc (as opposed to 'extraordinary').

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Replying to Ruddles:
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By Bobbo
27th Feb 2024 09:21

+1

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VAT
By Jason Croke
26th Feb 2024 19:31

I always thought of an SPV as having a short shelf life, set up an SPV, acquire property or some other asset, then hive it upto your main company, kill off the SPV. It was never intended to trade beyond a single purchase and sale/transfer.

Using an SPV to hold your property portfolio means the SPV is now just a 'company' and no longer special.

Besides, not that different to a company that isn't making any sales, they're called dormant companies aren't they ? Or is that a separate thread for another day? :)

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paddle steamer
By DJKL
26th Feb 2024 20:08

As a name I first became aware of them circa 2005-2008 pre financial crash, I had a really expensive textbook on Joint Ventures as we were exploring ways to progress a few property projects and it used the term (so term obviously even older than 2005)

Suffice to say the banking brake lock and skid from 2008 put paid to any JVs, we got ourselves pretty much thrown out of the developments by our then bankers, and that was it, since then no JVs considered. I do currently have the sniff of one as we own a property but need an operator who can run the business that the property supports, so possibly (faint possibly) a last hurrah before retirement and I get my SPV for a JV.

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paddle steamer
By DJKL
26th Feb 2024 20:14

Did by chance buy a Spectrum before Christmas, a Sinclair Spectrum in very good nick (barely used) as a present for my son. (No original box but mint instructions)

He is supposed to collect next time in UK, a Special/Specific Purpose Visit.

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Replying to DJKL:
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By FactChecker
26th Feb 2024 20:32

"mmmm, mint instructions ... tasty" - Homer S

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By gillybean04
26th Feb 2024 20:37

I assumed it was a buzzword dreamt up by someone selling courses, to influence the perception of their model as being more polished and professional than it really is.

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By DKB-Sheffield
26th Feb 2024 22:03

Isn't an SPV an MPV... but with fewer seats? Maybe a moped?

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Replying to DKB-Sheffield:
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By DJKL
27th Feb 2024 09:24

Single Person Vehicle (Unicycle)

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By JSA Mark
28th Feb 2024 11:45

SPVs seem to be required by mortgage lenders for portfolios specifically, as they dont like lending to a company that is both trading and operating a portfolio. Essentially it increases their manageable risk, as while they can risk assess whether the rent covers the mortgage and risk of non payment, when you factor in additional trading risk and cashflow issues, they get rather twitchy.
Had few clients recently where they were buying a buy to let, and unless it was in an SPV with specific SIC codes, the lender wouldn't consider a mortgage at all.

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Replying to JSA Mark:
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By Bobbo
28th Feb 2024 12:07

This is basically the point of the thread. The lender requires that the company is only doing property letting and no other trading is mixed in - the lender isn't requiring some different type of company, it is just a regular limited company.

The term SPV has been watered down from meaning something project-specific (like a single property development or a joint venture as mentioned by other commenters) to just meaning a company that does one thing (i.e. property letting). If a company that does only property letting is considered an SPV then arguably the majority of companies, that only carry out a single trade, are also SPVs.

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By justsotax
28th Feb 2024 11:55

SPV = charge premium price

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Replying to justsotax:
paddle steamer
By DJKL
28th Feb 2024 12:28

Suspect Pricing Value

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By JCresswellTax
29th Feb 2024 18:31

Probably one of the most annoying terms in accountancy/tax

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