Special purpose vehicle meaning

The Tower One St George Wharf Ltd v HMRC [2022] UKFTT 154 (TC) A corporate group was progressing a site for residential use as a development project. The concluding phase involved a 50‑storey tower, which they planned to place into a special purpose vehicle (SPV) to ring‑fence exposure to risk and potential liabilities, and to secure greater financial flexibility for the project as a whole. After consulting their tax advisers, the group executed a sequence of transactions on the very same day intended to step up the tax cost of the scheme, so the SPV would be treated as acquiring it at market value, with no tax liabilities arising along the chain overall. In outline, the company that owned the property granted a 999‑year lease to another group entity, B64. The shares in B64 were then purchased by...

Insurance & Reinsurance weekly highlights—3 October 2024 In this issue: Coronavirus (COVID-19) business interruption Ukraine conflict Cases and decisions Types of insurance UK Regulation EU Regulation New and updated content Case trackers Key dates Daily and weekly news alerts LexTalk®Insurance: a Lexis®Nexis community Coronavirus (COVID-19) business interruption Coronavirus (COVID-19) catastrophe claim (UnipolSai Assicurazioni SpA v Covéa Insurance PLC) — The Italian reinsurer’s bid to overturn Covéa Insurance Plc’s coronavirus business interruption recovery was unsuccessful, with a London appeal court on 30 September 2024 affirming that the pandemic satisfied the policy’s definition of ‘catastrophe’. See News Analysis: Reinsurer loses appeal over £69m coronavirus (COVID-19) catastrophe claim. Ukraine conflict Aviation claims — A multi-billion-dollar trial pitting the world’s largest aircraft lessors against their insurers, concerning hundreds of planes remaining in Russia, began in London on 2 October 2024, a dispute that could have significant repercussions for the insurance and reinsurance sector...

Wardle v HMRC [2024] UKFTT 543 (TC) The taxpayer held a 15% stake in the LLP, established in June 2015 as a special-purpose vehicle created to build and operate a power plant in Hull. In August 2015, the LLP raised an unsecured loan from a funder and proceeded to enter into more than 50 contracts with a range of counterparties concerning construction, operation and financing of the plant. During 2016, the LLP applied to the Environment Agency for a permit to operate the plant, and that authorisation was granted in May 2017. Commissioning of the plant was formally certified as complete in March 2018; however, no electricity was generated on a commercial basis until June 2019. The taxpayer then disposed of his interest in the LLP in February 2020. He claimed entrepreneurs’ relief in respect of that disposal but, following an enquiry, HMRC refused the claim. HMRC’s stance was that the LLP was not trading throughout the two years immediately preceding the disposal because it had not...

Types of special purpose vehicle and orphan trust The deployment of special purpose vehicle structures is widespread in aviation finance. They offer lenders several advantages, including tax benefits and a bankruptcy-remote platform for the financing. A special purpose vehicle (SPV), also known as a single purpose company (SPC), is a legal entity established for a limited aim; in aviation finance this is commonly to own an aircraft for a particular transaction. There are numerous forms of SPV used in aviation finance, with the principal categories being: subsidiary companies orphan trusts limited partnerships Each of these is considered below. The type of SPV selected will vary on a transaction-by-transaction basis. Subsidiary companies Subsidiary companies are typically limited liability companies incorporated in a tax-friendly jurisdiction...

This Practice Note explores the doctrine of separate legal personality for a registered company, and surveys the relevant case law addressing the narrow situations in which the corporate veil might be pierced. It also separates true piercing or lifting of the veil from the more routine instances in which the veil is sidestepped by reliance on another legal or equitable entitlement. The analysis underscores the limited nature of this intervention and the authorities that define it. Corporate legal personality—the Salomon principle A duly incorporated company is a person distinct from its members, holding its own rights and bearing its own liabilities as an independent legal subject. This rule, often called the corporate veil or the Salomon principle, was most famously articulated by Lord MacNaghten in Salomon v Salomon: the company, at law, is wholly separate from the subscribers to the memorandum; even if, after incorporation, the undertaking remains exactly as before, with the same individuals managing it and the same people receiving the profits, the company is not...

Role The role of credit rating agents (CRAs) is to deliver an independent, analytical view of the likelihood of payment default, by assessing multiple factors that guide investors on whether to commit to specific securities. Capital market investors are highly sensitive to risk, and some are constrained by their internal constitutional documents from investing in lower grade instruments. As a rule, the greater the investment risk, the higher the return (interest/coupon) demanded by investors. Ratings may apply to both the company issuing the instruments and the instruments themselves. An issuer’s debt can be rated apart from the issuer, for example where the issuer is a special purpose vehicle created solely for the issuance, or where the debt benefits from credit enhancements (eg a guarantee) that lift it above the issuer’s own standing rating. For example, the following can be rated: the issuer senior debt/syndicated loans medium term notes (MTNs) commercial paper (CP) fixed income securities sovereign debt residential mortgage...

In financial remedy proceedings, it is usual for one party to earn on a self-employed footing as a sole trader in practice. Instead of using a separate legal personality, for example a company acting as the primary earning vehicle and paying salary and dividends, they trade in a chosen style or their own name and settle personal income tax on profits. Business costs are set off in the ordinary manner, and accounts are normally drawn up for this very purpose. Some sole traders simply run income and outgoings through a personal bank account, while others prefer to operate from a separate, dedicated business account...