Overview to Set Up SPV Company in the UK

Choosing to set up an SPV Company could be the step up you are looking for in your business. Whether you are in a partnership contract or want something specific for your buy-and-sell business related to properties, SPV (Special Purpose Vehicle) Companies will help you plan and flow finances and strategies better.

What Is an SPV Company & Why Set One Up?

Special Purpose Vehicle might have led you to think it is related to vehicles, but its definition is different. SPV is a company you set up for special projects, investments and protection. Protecting who? It would protect your parent company and even you from various financial risks. Having everything a company has, from its assets to its financial statements. Protection is not the only cause for creating one.

Benefits of Having an SPV Company

1. If you are a personal landowner and have been paying income tax, then owning an SPV will convert your taxes to corporation taxes, which comparably is less than your previous tax bills.
2. Joint ventures have become more convenient since all the investors can hold shares in SPV, and sharing profit has become easier.
3. Risks of liability are transferred to your SPV company, which prevents your main company from being personally liable for its loan and mortgage.

Having so much to gain and nothing to lose, an SPV company is a must-try for all of us.

Steps to Set Up an SPV Company

 However, setting up an SPV company has more to do with planning than setting it up.

1.   Choose a Legal Structure

Yes, there is a legal structure to choose from, whether you want your SPV company to be an LLC (Limited Liability Company) or LP (Limited Partnership). Beginners may be confused about which one to pick. Both have their own merits and demerits.

LP requires you to have two types of partners: general and limited. The general partner performs day-to-day tasks and exercises his powers but is personally held liable for any losses the business faces. At the same time, the limited partner exercises less power in daily activities but is liable only to a certain limit.

LLC operates with a manager and keeps all its members free from liability, while the company, an artificial human with its assets and liabilities, is much more preferred.

Once you choose the structure, you must follow a few legal procedures to set up a legal presence, like registering your SPV with the company house, sending important documents (like MOA, AOA, proof of identity and address with details of the SIC Codes), setting up a business bank account, and finally registering it with HMRC for taxes. Begin filling out an application form to present to the company’s house.

Attached with your application form will require you to present some signed important documents.

AOA (Article of Association)

A document that expresses how you run the company and the rules you use internally in your company. It will provide more detailed information about your company.

Operating Agreement

Operating Agreement is signed by all the members and investors agreeing to various powers and authority they hold in the SPV.

Private Placement Memorandum (PPM)

Private Placement Memorandum is a document about the rules and regulations was presented to future and potential investors.

Subscription Agreement

It is a document signed by the investors confirming their funds for a particular project.

A professional legal team at Property SPV will look into these documents to understand their purpose and help you draft agreements that meet your specifications and requirements.

2.   Find the Best SIC Codes for your SPV

While you fill out an application form, it will contain some SIC Codes that will define the main motive of your business. You can choose the following codes:

• 68209 – Other Letting & Operating of Own or Leased Real Estate
• 68201 – Renting & Operating of Housing Association Real Estate
• 68320 – Management of Real Estate on a Fee or Contract Basis
• 68100 – Buying & Selling Own Real Estate

3.   Open A Bank Account

Now, it will want you to acquire an Employer Identification Number from the IRS, which will be required to open a bank account for your SPV Company and to file taxes.

For non-residents, Property SPV will provide and help you with every document you need to register your SPV.

4.   Final Step

Once you finish all the documents, begin buying company assets. Ensure all your funds are kept at one point: the account you created. Raising capital for your SPV must not be a hurdle for you as long as the documents are there. Choose a bank that is suitable for your SPV Company.    

But we are just one call away if you have any document issues.

The documentation step legalises your company, and other steps have your company ready to begin the project that you have set it up for.

Conclusion

SPV is a very beneficial tool for your business. Bringing benefits for you and lowering risks for your main company. Registering for SPV Company is easy if you are a UK resident and have the required documents. It might be a bit of a hustle if you are a non-UK resident.

Make sure your statements about what you want your SPV to be are clear and precise. By following the steps mentioned earlier, you will be all set to have your own SPV Company.