Interesting dealings with a sole trader/limited company

Discussion in 'General Business Forum' started by Emu, Oct 9, 2019.

  1. Emu

    Emu UKBF Contributor Free Member

    49 11
    (Thinking about this I might hae been better placed in the legal forum but I dont see a way to move it)

    Im trying to get my head arond something Ive stumbled on.

    Ive had some work done on my home office and it was poor, I paid a deposit before the work started then paid in full after but have since found fault with the work so it will need more work. Thats just background and not too important to the question.

    The person who did the work has put themselves forward as a company, they have a website with a company number on it, a van with the company name on it and when they invoiced me the invoice came from a company which was using what looks like a virtual office address but once again the invoice has the company number on it.

    I was thinking about maybe taking action against them to get the money back, in all seriousness it was less than £1k and I dont know if I could be bothered with the hassle but I did have a look at the steps to making a small claim.

    One of the 1st things you are advised to do when making a small claim is trying to work out if the company has the money to pay you so I looked up their accounts on companies house and the business has been registered since 2010 in the name and with the number that the guy has used, however, it has never posted accounts and is a dorment company.

    Ive looked in a bit more detai and through menthods I wont go into I know that the account number to which I transfered the money was the wife of the guy who I have been dealing with so it is not a company account I have paid to.

    The "company" has been trading for over 20 years, Ive looked into it and found record of this guy providing these type of services gong back to at least 2006 so he has been doing the work a long time. Also the person seemed desparate for money, he would invoice then text to ask when it would be paid. I told him I would pay the same day but I had another 4 text messages and 10 calls (not all answered) the same day.

    I wondered if the urgency with which he wanted paying was because he knew I may find fault with the work he did rather than part of this unusual setup.

    Anyhow - getting the money back aside I am really interested in this sort of stuff and trying to work out why he would opt for this setup?
    Initially I thought that hiding behind a limited company would mean he has the appearance of limited liability but if he wanted to limit his liability he would just use a ltd company? If I am paying the person behind the service and not a comapny there is an argument no matter what it says on the invoice that he is a sole trader? I also wondered if this setup means he basically owes his business money for the years he has been doing it?

    Basically there is a reason why someone would use this setup and I would love to know what he is up to, does anyone have any ideas?

    Thanks for reading if you got this far
     
    Posted: Oct 9, 2019 By: Emu Member since: Jun 13, 2016
    #1
  2. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

    3,084 370
    Posted: Oct 10, 2019 By: Lisa Thomas Member since: Apr 20, 2015
    #2
  3. CA85

    CA85 UKBF Newcomer Free Member

    18 2
    Claim against a dormant company? - how does that work?

    Interesting situation. Could be a tax dodge, or vat dodge, or he could just have mucked up the admin and he is operating and paying his taxes as a sole trader.

    Did you get a written quote? was it from the ltd?
    Did he/the company charge vat on the invoice?
    I wonder if his insurance is in his name or the company name (if he has any)?
     
    Posted: Oct 10, 2019 By: CA85 Member since: Oct 9, 2019
    #3
  4. The Byre

    The Byre UKBF Ace Free Member

    8,978 3,506
    1. The OP can claim against a dormant company. Dormant companies still have to pay their debts.

    2. If the company is issuing invoices and works are being carried out in its name, then it is de facto no longer dormant.

    3. If the OP gets the judgment against the dormant company and then applies for an order to obtain information about the director(s), this will give him an opportunity to ask relevant questions prior to taking any enforcement action.

    4. There are many reasons for a company to be dormant, but I cannot think of any legitimate reasons for a sole trader to seek to trade in the name of a truly dormant company, though he could claim to have only now just reactivated the company - indeed, by trading in its' name, he has done.

    A quick word with @smallclaimsassistance might be in order here.
     
    Posted: Oct 10, 2019 By: The Byre Member since: Aug 13, 2013
    #4
  5. CA85

    CA85 UKBF Newcomer Free Member

    18 2
    Putting aside the fact that the set up is dodgy, either deliberately or because the builder does not know any better - what good is a claim against a dormant company, it has no assets?

    Or do the actions of the builder mean you could go after him personally, outwith the limited liability that a ltd company offers?
     
    Posted: Oct 10, 2019 By: CA85 Member since: Oct 9, 2019
    #5
  6. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

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    Based on the OPs post it seems that its not really a dormant company and presumably if it has customers it may well have assets.

    If the builder is using it as some of of shell to hide behind then he may not want any proceedings to be brought against the Company.
     
    Posted: Oct 10, 2019 By: Lisa Thomas Member since: Apr 20, 2015
    #6
  7. The Byre

    The Byre UKBF Ace Free Member

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    Especially as HMRC must be informed without delay if a dormant company has resumed trading!
     
    Posted: Oct 10, 2019 By: The Byre Member since: Aug 13, 2013
    #7
  8. CA85

    CA85 UKBF Newcomer Free Member

    18 2
    I'm just trying to understand how the OP physically gets his £1,000 back?

    The company has submitted dormant accounts showing no assets, is registered as dormant at HMRC, and has no accounting system or records. The cash received from the invoices has gone into the wife's personal bank account.

    Regardless of how dodgy set up is, our "contract" is with the ltd company and not with the builder as a sole trader or with his wife. So we make a claim against the dormant company - but how do we actually get the £1,000 in our hands (or in the OP bank account)?
     
    Posted: Oct 10, 2019 By: CA85 Member since: Oct 9, 2019
    #8
  9. The Byre

    The Byre UKBF Ace Free Member

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    The company is NOT dormant - the owner is merely PRETENDING to be dormant. He is trading in the name of the company - it is therefore NOT dormant and has assets. The fact that he has not reported the company as being active and trading to HMRC and Companies House is irrelevant as far as the OP is concerned - though I am sure that HMRC and CH would be interested to hear why they haven't been told!

    If the subterfuge is extreme enough, the OP may even be able to take action against the director himself.
     
    Posted: Oct 10, 2019 By: The Byre Member since: Aug 13, 2013
    #9
  10. CA85

    CA85 UKBF Newcomer Free Member

    18 2
    I agree with everything that has been said, but how does the OP get his £1,000. Yes the company has traded and yes the OP is entitled to his £1,000.

    But ultimately the company does not even have a bank account, let alone £1,000 in it to give to the OP, and the liability rests with the company and not the builder personally.
     
    Posted: Oct 10, 2019 By: CA85 Member since: Oct 9, 2019
    #10
  11. paulears

    paulears UKBF Big Shot Full Member

    3,961 981
    If you believed you were paying t he company, and the money went into a personal bank account without your knowledge, then is this not fraud?
     
    Posted: Oct 10, 2019 By: paulears Member since: Jan 7, 2015
    #11
  12. John Hemming

    John Hemming UKBF Regular Full Member

    157 19
    It sounds to me like some form of tax evasion.
     
    Posted: Oct 10, 2019 By: John Hemming Member since: May 23, 2019
    #12
  13. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

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    Posted: Oct 11, 2019 By: Lisa Thomas Member since: Apr 20, 2015
    #13