In this guide, we unpack the meaning of special purpose vehicles (SPVs), giving you all the information you need to decide whether one is right for your business. 

Over the years, SPVs have become popular with property investors – here at Williamson & Croft we provide property accountancy services to help with this. SPVs also have various other use cases across multiple industries, which we’ll explore in detail. 

What we cover:

  • SPV meaning
  • The purpose of an SPV
  • Benefits and risks of setting one up
  • Costs and fees involved
  • How to set up an SPV

What is an SPV? 

An SPV, also called a special purpose entity (SPE), is an entity set up for a particular function, with the intention of isolating financial risk and liability.

What is the purpose of an SPV?

The SPV operates independently from its parent company. This means that if the SPV incurs any liability, for example, it becomes insolvent – the parent company will not be affected.

In addition to the isolation of liability from the corporate group, SPVs also allow investors to pool their capital into a single entity. The SPV can then undertake riskier ventures/activities whilst the investors have the comfort of knowing that any liability (be that financial or otherwise) will not be passed on to them. 

Reasons to set up an SPV:

  • Isolate the parent company’s assets from any liability the SPV incurs
  • Protect valuable assets within the corporate group 
  • Allow individual investors and fund managers to pool capital into one entity
  • Mitigate risks associated with complex financial transactions
  • Invest in and protect property holdings / other assets

Benefits and risks of an SPV for a parent company

As noted above, there are many reasons as to why parent companies might seek to incorporate an SPV. But first, it is worth making sure that you’re aware of the various benefits and risks associated with them.

Benefits of an SPV

  • Raise capital: SPVs can help the parent company get money by issuing bonds or debt at better rates.
  • Isolate risk: SPVs provide a layer of protection between them and their parent company.
  • Ease of set up: SPVs can be established in a matter of hours through Companies House or by enlisting accountancy services.

Risks of an SPV

  • False security: There are instances where, if the SPV fails, redress for any liability incurred may be sought against the parent company.
  • Lower access to capital: As the SPV doesn’t have the same credit as the parent company, it will likely have less access to capital.
  • More attention from regulators: Using SPVs might attract regulators’ attention, especially if they’re used to hide problems or manipulate the financial records. 
  • Negative optics: SPVs sometimes have negative connotations due to notable cases of accountancy loopholes being exploited. They have also faced bad press in relation to financial scandals – most notably, the Enron Scandal – so seeking an expert consultant is advised.

So, while SPVs have their perks, they also come with some risks that we need to be aware of.

How much does it cost to set up an SPV?

Setting up an SPV can cost between £100 and £500 if you use a professional. If you set it up online, it takes just a few minutes to arrange. Alternatively, you can consult an accountant, lawyer or company formation professional for assistance.

The amount you’ll need to pay will vary depending on several factors, including: 

  • the service provider you choose;
  • the complexity of the structure; and
  • any additional services you need.

General cost guidelines

  • Incorporation fee for setting up the SPV: The primary cost is usually the fee for establishing the SPV as a limited company.
  • Registering the SPV’s office address: Every limited company in the UK must have a registered office address. You may choose to use your own address or pay for a registered office service, which can cost anywhere from around £50 to several hundred pounds per year.
  • Setting up the business bank account: You’ll also need a business bank account for the SPV. Some banks may charge fees for account setup and overseeing its maintenance.
  • Additional services: Depending on your specific needs, you might incur additional costs for services such as tax advice, accountancy, use of a financial or legal advisor, or ongoing compliance support.

For any tax-related queries, you can rely on our expert tax consultancy services. Our team of accountants in Manchester & Liverpool will be happy to assist. 

How to set up an SPV in the UK

You can register a new limited company yourself or get in touch with our team for support.

  1. Choose your company name

First, decide on a name for your SPV. This cannot be the same, or too similar, to one that already exists, including your own. Companies House is a handy tool for searching existing registrations.

  1. Begin registration

Once a unique name has been chosen, you’ll need to register it. You can register a new company online, or use an accountant or company formation agent.

  1. Registered address

The public address of your company where Companies House correspondence will be sent.

  1. Ensure there is at least one director and one shareholder

The registration process will require you to state what proportion of the company is owned by whom. You should outline the limited company’s director(s) (i.e. the people who will run the company day to day). For a small SPV, this may be the same as the shareholders.

  1. Define your company’s SIC code

You need to use the correct SIC (Standard Industrial Classification) code. A SIC code is used to classify the type of economic activity your company will be engaged in.

  1. SPV nomination

The registration information, including the memorandum of association and articles of association, should clearly state the activity of the company and that it is a special purpose vehicle.

  1. Submit your form to Companies Houses

Once your form has been submitted and reviewed, if approved, your SPV will stand as its own legal entity. You will then need to register with HMRC for corporation tax. This should be done within three months of the SPV being incorporated.

What is a SIC code?

A SIC code is a five-digit number that’s used to classify a business’ economic activity. It’s submitted to Companies House and is used to track the number of businesses in each type of industry.

How do I find out my SIC code? For a full list of SIC codes, visit Companies Houses for a comprehensive SIC code list. 

Williamson & Croft are here to assist you

Now that you’re more familiar with the SPV meaning and its various functions, we hope you feel confident in setting one up should you decide it to be beneficial for your next venture.

At Williamson & Croft, we know how important it is to be informed in financial matters such as these. So, if you’re ever unsure about going it alone or it’s your first SPV, we would recommend using a professional accounting service you can trust. 

Our accountants in Liverpool and Manchester are ready to make sure you have the confidence to make the right decisions when it matters most.

Simply contact us on 0161 399 0121 or email us at