Sole trader same activity as his limited company

[progress1]

I have a problem with a limited private company which owes me money and I have discovered that the director of this limited company is running at the same time a sole trader company which has the same activity as his limited private company

I would like to know if this is legal and which law could have been breached

 

[DWS]

If it is structured correctly then yes it is legal.

 

[Newchodge]

If it is structured correctly then yes it is legal.

If it is the same work is it not artificial separation and potentially VAT evasion? Which would be of interest to HMRC.

 

[DWS]

If it is the same work is it not artificial separation and potentially VAT evasion? Which would be of interest to HMRC.

As I said ‘if it is structured correctly’
Both maybe registered for VAT, we just don’t know, too many unknown facts to give a yes or no answer.

 

[Chris Ashdown]

We had a ltd company which had different web sites trading as different names the main site was Internet workwear ltd and other site trading as British Chefs, workwear covered all workwear and chefs just chefs uniforms making it easier to market

 

[progress1]

It is the same work and moreover he used as trading name for his sale trader business the same name as his limited company less the “ltd” at the end

 

[Daybooks]

It is the same work and moreover he used as trading name for his sale trader business the same name as his limited company less the “ltd” at the end

The word "limited" refers to the legal status of the entity registered at Companies House. How do you know the director is operating as a sole trader alongside the company?

It is not unlawful to do what you believe is being done. The soletradership would need to be registered with HMRC within appropriate timeframe but that is not something you would be privy to.

 

[progress1]

I thought that I was dealing with his limited company but he told me that his limited company is ‘dormant’ and he trades with his sole trader business

Hence, he can chose either to work with his limited company or with his sole trader company so he can have the advantage of a limited company and not have the disadvantage simply by working also with its sale trader company. I would like to know if it is legal or a ‘trick’ for example to pay less tax

It is the same work, with the same equipment and the same employees and according to what I found in the Internet this is evidence of “artificial separation”.

 

[Daybooks]

I thought that I was dealing with his limited company but he told me that his limited company is ‘dormant’ and he trades with his sole trader business

Hence, he can chose either to work with his limited company or with his sole trader company so he can have the advantage of a limited company and not have the disadvantage simply by working also with its sale trader company. I would like to know if it is legal or a ‘trick’ for example to pay less tax

It is the same work, with the same equipment and the same employees and according to what I found in the Internet this is evidence of “artificial separation”.

On what basis did you believe you were dealing with the limited company? Did the director give you cause to believe you were and can you prove it?

He can choose to work with either providing he is transparent in all those dealings. However the moment he works out of the limited company its dormant status is lost. It can be regained subject to a period of non-trading.

Again you don't know, I suggest, whether the equipment is owned by the company or the sole trader. A sole trader can employ staff although it is probably not the norm. Artificial separation is usually in context of a trader separating out their businesses into two or more entities with the intention of avoid having to register each for VAT. In other words each entity is below the threshold and therefore not mandated to register. HMRC use this to compel them to register.

Your concerns may be proven if you knew who the "employees" were employed by - the company or the sole trader. Again information that you are not necessarily privy to.

 

[Newchodge]

We had a ltd company which had different web sites trading as different names the main site was Internet workwear ltd and other site trading as British Chefs, workwear covered all workwear and chefs just chefs uniforms making it easier to market

That's fine - there is still only 1 lrgal entity - the limited company with multiple trading names.

 

[progress1]

The other reason why I am unhappy with this sole trader business is because I have been mislead by it because I believed that I hired a limited company and not a sole trader because I searched its name in the website in the Companies House and I found its name so I believe that it was a limited company.

Hence, I would like to know if this sole trader has acted illegally using as trading name for his sole trader company the same name as his limited company with only the “ltd” less at the end.

I think that there should be law protecting the names of limited companies and banning their use by sole trader

Hence, I would like to know what is this law that this sole trader could have breached which says that a sole trader cannot use a similar or same name as an incorporated limited company

 

[fisicx]

You can have a multiple traders with the same name but only one limited company. And a limited company can have multiple ‘trading as’ names. All quite legal.

 

[Newchodge]

The other reason why I am unhappy with this sole trader business is because I have been mislead by it because I believed that I hired a limited company and not a sole trader because I searched its name in the website in the Companies House and I found its name so I believe that it was a limited company.

Hence, I would like to know if this sole trader has acted illegally using as trading name for his sole trader company the same name as his limited company with only the “ltd” less at the end.

I think that there should be law protecting the names of limited companies and banning their use by sole trader

Hence, I would like to know what is this law that this sole trader could have breached which says that a sole trader cannot use a similar or same name as an incorporated limited company

If you feel you have been deliberately misled to believe that you were dealing with a ltd company when actually you were dealing with a sole trader, contact trading standards. However if his dealings with you were all about ABC and ABC Ltd was never mentioined, you have not been deceived.

 

[paulears]

In your example, surely discovering you were dealing with the sole trader is the best solution possible when money is owed. The limited liability means you cannot take him to court and the Ltd Company may have no assets, but him personally? You can take him to court and if he has house, cars, money - it's fair game to the court. I think you got the best solution. Usually it is the other way around. I would personally deal with a sole trader because that person is truly responsible.

 

[progress1]

You forgot that a limited company has a registered address in the Companies House which could be use as address for service in a claim to the court, however; if we do not know the personal address of the sole trader it will be impossible to serve any claim on him.

Hence, I have been mislead

 

[DWS]

So who did you invoice?
The Ltd Company?

Was this for goods you sold or for services provided?

 

[fisicx]

You forgot that a limited company has a registered address in the Companies House which could be use as address for service in a claim to the court, however; if we do not know the personal address of the sole trader it will be impossible to serve any claim on him.

Hence, I have been mislead

What address was on the invoice? Was the invoice in the name of the company or the person who provided the service?

And it's easy to get the address of anybody. There are loads of websites offering this service.

 

[progress1]

I have not yet received any invoice

Moreover, the rules which says that the name of a sole trader could not be similar or the same as this of an existing company, which include the name of any limited company registered in the Companies House, means the name without the "ltd" or "limited" at the end

 

[progress1]

I would be grateful to you if you tell what are the websites offering the service of informing us of the personal address of someone else

 

[DWS]

So who did you invoice?
The Ltd Company?

Was this for goods you sold or for services provided?

Apologies for the above, I just reread the thread and it seems you hired them, it was just that you said they ‘owed’ you money so I thought you were the provider.
So how exactly are you owed money if you hired them?

 

[progress1]

Our dispute is too complicated to explain

The main issue is concerning the fact that the sole trader uses the same name as its limited company and concerning this issue I would like to add that even if the sole trader uses the same name as its limited company without the "ltd" this make it similar to the name of the limited company so illegal

 

[ecommerce84]

Is there any activity for the company on companies house or has it been dormant for the get go?

It’s not unheard of for people running a sole trader or partnership business to register a Ltd company and leave it dormant to either prevent others from registering it and passing off or with the intention of moving to a Ltd company in the future.

There are also plenty of people that do this sort of thing for nefarious reasons though. You only have to watch an episode or 2 of Rogue Traders etc to see this in action.

 

[DWS]

Our dispute is too complicated to explain

The main issue is concerning the fact that the sole trader uses the same name as its limited company and concerning this issue I would like to add that even if the sole trader uses the same name as its limited company without the "ltd" this make it similar to the name of the limited company so illegal

Well if you cannot explain more then to my mind they have done nothing illegal, you can make a complaint that they are ‘passing off’ but I would imagine all that would happen is that one entity may have to change their name.

 

[Daybooks]

The other reason why I am unhappy with this sole trader business is because I have been mislead by it because I believed that I hired a limited company and not a sole trader because I searched its name in the website in the Companies House and I found its name so I believe that it was a limited company.

Hence, I would like to know if this sole trader has acted illegally using as trading name for his sole trader company the same name as his limited company with only the “ltd” less at the end.

I think that there should be law protecting the names of limited companies and banning their use by sole trader

Hence, I would like to know what is this law that this sole trader could have breached which says that a sole trader cannot use a similar or same name as an incorporated limited company

You searched Companies House and possibly drew the wrong conclusion.

So far the evidence offered by yourself is that you were not misled. Can you prove otherwise - something in addition to what you have already said?

Have you considered why no one has yet pointed you to the piece of legislation you feel should exist?

 

[fisicx]

I would be grateful to you if you tell what are the websites offering the service of informing us of the personal address of someone else

Just do a Google search.

 

[Newchodge]

Just a basic question. How do you know for certain that the sole trader and the ltd company are run by the same person?

 

[fisicx]

Our dispute is too complicated to explain

The main issue is concerning the fact that the sole trader uses the same name as its limited company and concerning this issue I would like to add that even if the sole trader uses the same name as its limited company without the "ltd" this make it similar to the name of the limited company so illegal

That’s not true. There are umpteen sole traders all with similar names. And an awful lot of these have name similar to or identical to registered companies. I know because I’m one of them. The limited company is an international brand and they can’t do anything about me using their name.

 

[Newchodge]

I have not yet received any invoice

Moreover, the rules which says that the name of a sole trader could not be similar or the same as this of an existing company, which include the name of any limited company registered in the Companies House, means the name without the "ltd" or "limited" at the end

Which rules?

 

[paulears]

You forgot that a limited company has a registered address in the Companies House which could be use as address for service in a claim to the court, however; if we do not know the personal address of the sole trader it will be impossible to serve any claim on him.

Hence, I have been mislead

Post office boxes and accountants office address are so much help? Personal names are much, much easier to find if you need to.

 

[BusterBloodvessel]

It's not illegal to use the same, or similar, name as a sole trader as an existing Ltd company.

Based on the information you've given us so far, that's the end of this thread.

I think that there should be law protecting the names of limited companies and banning their use by sole trader

You might think there should be, but that's irrelevant, because there isn't.

If you want to provide some more context/detail about what's gone wrong, maybe people on here can offer other advice. But the magical answer you're looking for doesn't exist.

 

[fisicx]

@progress1 it would help if you told us what product or service was provided. It would at least provide some context.

 

[progress1]

In the website of the Government

https://www.gov.uk/become-sole-trader/choose-your-business-name

It is stated the following:

Sole trader names must not:

include ‘limited’, ‘Ltd’, ‘limited liability partnership’, ‘LLP’, ‘public limited company’ or ‘plc’

be offensive

be too similar to another company’s trademarked name (because you may have to change it if someone makes a complaint)


This means that if the sole trader uses the same name as his limited company with the “ltd” less for example ABC instead of ABC ltd he will use a name very similar to this of his limited company and this should be illegal

 

[DWS]

In the website of the Government

https://www.gov.uk/become-sole-trader/choose-your-business-name

It is stated the following:

Sole trader names must not:

include ‘limited’, ‘Ltd’, ‘limited liability partnership’, ‘LLP’, ‘public limited company’ or ‘plc’

be offensive

be too similar to another company’s trademarked name (because you may have to change it if someone makes a complaint)


This means that if the sole trader uses the same name as his limited company with the “ltd” less for example ABC instead of ABC ltd he will use a name very similar to this of his limited company and this should be illegal

No, it does not say it is illegal!

 

[progress1]

but it says "Sole trader names must not" so what "must not" could mean?

 

[fisicx]

In the website of the Government

https://www.gov.uk/become-sole-trader/choose-your-business-name

It is stated the following:

Sole trader names must not:

include ‘limited’, ‘Ltd’, ‘limited liability partnership’, ‘LLP’, ‘public limited company’ or ‘plc’

be offensive

be too similar to another company’s trademarked name (because you may have to change it if someone makes a complaint)


This means that if the sole trader uses the same name as his limited company with the “ltd” less for example ABC instead of ABC ltd he will use a name very similar to this of his limited company and this should be illegal

That’s not the same thing at all. It just says you can’t use a trademarked name. It does not say you can’t have the same name.

 

[Newchodge]

In the website of the Government

https://www.gov.uk/become-sole-trader/choose-your-business-name

It is stated the following:

Sole trader names must not:

include ‘limited’, ‘Ltd’, ‘limited liability partnership’, ‘LLP’, ‘public limited company’ or ‘plc’

be offensive

be too similar to another company’s trademarked name (because you may have to change it if someone makes a complaint)


This means that if the sole trader uses the same name as his limited company with the “ltd” less for example ABC instead of ABC ltd he will use a name very similar to this of his limited company and this should be illegal

But IT IS NOT ILLEGAL.

What he has done, apparently, means that the name is

too similar to another company’s trademarked name (because you may have to change it if someone makes a complaint)

Except, the other name wasn't trademarked and even if it were it is his name so he is not going to make a complaint, is he?

Please try to understand

 

[eteb3]

it says "Sole trader names must not" so what "must not" could mean?

GOV.UK is notorious for misstating the law by oversimplification: it regularly glides over important details, and fails to distinguish black-letter law from paternalistic advice.

The provision you may be looking for is here: https://www.legislation.gov.uk/uksi/2015/17/part/5

~“A person must not carry on business using the word “limited” unless that person is a company.”

You haven’t said if they carried on business under the limited name or not. Did they mention the word “limited” at any stage? If they didn’t, you’re probably on your own.

It’s just possible the new Companies House powers might be relevant, if the name of the company is in order to perpetrate fraud, which might just be arguable here if the sole trader is using the existence of the limited to obtain a “pecuniary advantage by means including deception” (ie by persuading people to enter into a contract as you did, thinking it was the limited that is contracting) But it’s the deception that’s all-important, and on your current facts, you have been naive but not deceived.

In future I would formally ask for the name and address of the person you are contacting with. It’s illegal not to give this info (though not a crime) so the answer is conclusive evidence in legal proceedings

You seem determined to ignore advice that you are in a stronger position disputing with a sole trader versus a limited company. I guess it’s a free country!

 

[Lucan Unlordly]

I have a problem with a limited private company which owes me money and I have discovered that the director of this limited company is running at the same time a sole trader company which has the same activity as his limited private company

I would like to know if this is legal and which law could have been breached

Owes you money for what?

 

[Chris Ashdown]

This is just going around in circles, the OP will not explain what the whole story is and has lost the plot about what he wants and concentrates on who the other person is or whether they are ltd

 

[BusterBloodvessel]

You are misinterpreting the Government website.

In the website of the Government

https://www.gov.uk/become-sole-trader/choose-your-business-name

It is stated the following:

Sole trader names must not:

include ‘limited’, ‘Ltd’, ‘limited liability partnership’, ‘LLP’, ‘public limited company’ or ‘plc’

This just means you can't call yourself "Joe Bloggs Limited" if you're NOT registered as a Ltd company. I think that also extends to ambiguous stuff e.g. calling yourself "Joe Bloggs Limited Operations" which you could argue infers that you operate with limited opening hours or with a limited amount of stock, but could easily be misread as being a limited company.

be too similar to another company’s trademarked name (because you may have to change it if someone makes a complaint)

A trademarked name. So you couldn't call yourself "Adidas Sports Shop".

This means that if the sole trader uses the same name as his limited company with the “ltd” less for example ABC instead of ABC ltd he will use a name very similar to this of his limited company and this should be illegal

If not trademarked, not illegal. For example my friend is a sole trader and trades under "AB Maintenance" (his initials). A quick look at companies house shows there is an "AB Maintenance Ltd", as well as "AB Maintenance (Bham) Ltd", "AB Maintenance Services Ltd". No doubt these all just trade as "AB Maintenance" but nothing illegal.