SPV Accounting Services - Setting up Special Purpose Vehicle (SPV) to Purchase Properties

Properties held for sale, rented out while being marketed, or intended to be sold in the ordinary course of business should be classified as inventories rather than investment properties.

Special purpose vehicles (SPVs) serve a specific purpose in many companies, particularly in the realm of property management and purchasing. As separate legal entities, SPVs are designed to mitigate risks associated with these activities.

However, due to their unique nature, SPVs often have distinct requirements when it comes to general accounting and taxation. Unlike trading businesses, SPVs typically have specialised accounting needs that focus on property-related transactions, such as rental income, property expenses, and capital gains. The use of the cost model in accounting for investment property under IAS 40 is often applied, especially in instances of undue cost or effort, for micro-entities reporting under FRS 105, and for transfers to or from investment property classification. IAS 40 allows entities to choose between the fair value model and the cost model for the measurement of investment property, outlining specific disclosures and considerations related to the fair value model, including the requirement to recognize changes in fair value in profit or loss.

They also require specific tax considerations, such as depreciation allowances and tax deductions related to property ownership. Additionally, there is a requirement to recognize deferred tax in relation to fair value gains and losses on investment property, emphasizing the importance of recognizing deferred tax liabilities or assets in relation to these gains. Proper understanding and management of these accounting and taxation aspects are crucial for SPVs to effectively serve their purpose within a company.

We considered ourselves as UK’s most experienced SPV Accountants. SPV Company know as Special Purpose Vehicle Company could be a great option for buying, letting out, and managing properties. One can form SPV as a limited company, trust or partnership.

Consult us to discuss your questions regarding SPV company, such as:

• What is an SPV Limited Company?
• What are the steps to Setup an SPV?
• Which SIC Code(s) Should You Use At Companies House?
• Which Buy-To-Let Mortgage Lenders Will Lend To An SPV Limited Company?
• How Much Can I Borrow With An SPV Limited Company Buy-To-Let Mortgage?
• Do I Need A Separate Bank Account For An SPV Limited Company?
• Can A British Ex-Pat Buy Property In A UK SPV Limited Company?

SPV Accounting Services

You can register a new Limited Company to use as an SPV with help of our specialist property tax accountants. We provide SPV accounting services for:

• SPV for Residential Properties
• SPV for Commercial Properties

Here are some main features of an SPV:

• You can form as a limited partnership or limited company or corporation or trust.
• All SPVs will have its own balance sheet.
• For each project, you can form several different SPVs to keep all projects independent.
• Investment properties within an SPV must be measured at fair value according to accounting standards. Under FRS 102, investment property fair value gains and losses are recognized in the profit and loss account, and deferred tax is brought into account. Any gains on investment property are non-distributable and are distinguished between ‘revaluation reserve’ and ‘non-distributable reserve’.
• Property within an SPV, including investment property, can be sold or transferred if you choose to sell or transfer ownership of the SPV.

Steps to Set up SPV Company

Are you a landlord or property investor and thinking to setup SPV company? If so here are few steps to understand what will you need?

• Determine the type of property you are investing in.
• Decide on the structure of your SPV.
• Register your SPV with the relevant authorities.
• If the fair value of the investment property component cannot be reliably measured without undue cost or effort, the entire property must be treated as property, plant, and equipment.
• For mixed-use properties, it is essential to separate the investment property portion from the property, plant, and equipment portion, especially when they can be sold or leased separately. If the fair value of the investment property portion cannot be reliably measured, it has significant implications for accounting treatment.
• Ensure that you measure investment property at fair value to comply with accounting standards.