Sole trader carries out same activity as his limited company

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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

TheSpectator

Why would it not be legal? They could also trade as a partnership if they wanted to, doing the same trade. Joe Bloggs Ltd, Joe Bloggs, Joe Bloggs and partner(s)

Any dispute you have is with the entity you engaged.

MattMattMattUK

autoplay said:

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

It is legal, no laws would have been breached.

martindow

Have you looked on Companies House to see if the limited company is in trouble, late filing accounts for instance?  There is little point opening a claim if there are no assets.

Grumpy_chap

autoplay said:

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

Which business have you contracted with - the Ltd Co. or the sole trader?  That is the only one you can pursue.

I can't see any reason why this would be illegal.

I can see reasons why this might be the way someone would choose to operate, even though it does seem to add extra complexity to things. 
Consider a roofer that undertakes works for corporate business who require a Ltd Co structure, VAT registration, certain insurances etc.  All of these have a cost and set a schedule of rates.
The same roofer might also do work for individual householders who are more flexible and less demanding with regard to insurances etc.  This might then be on sole-trader basis to allow the work to be delivered without the  burdens that are attached to the Ltd Co., hence cheaper rates.
(I do understand there are some specific rules about VAT registration and "linked businesses" which may impact this type of arrangement.)

autoplay

He works for the same type of clients with his limited company and with his sole trader company.

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” which is illegal.

Moreover he used as trading name for his sale trader business the same name as his limited company less the “ltd” at the end.

TheSpectator

So, what entity does the contract/invoice state? A dormant Ltd coy should not be trading

Grumpy_chap

autoplay said:

He works for the same type of clients with his limited company and with his sole trader company.

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” which is illegal.

Moreover he used as trading name for his sale trader business the same name as his limited company less the “ltd” at the end.

If the Ltd Co is dormant - have you checked this at Companies House website? - the Ltd Co should not be trading so there should be no working for any clients with the Ltd Co and everything should be through the sole trader structure.

Working both Ltd Co and sole trader may reduce tax liability, but may increase tax liability and overall operating costs.  There are rules around artificial separation of linked businesses, but these are probably not where you need to be focusing your efforts as it is outside your control.

There are valid reasons why a sole trader might only ever operate as a sole trader, but might register a non-trading (dormant) Ltd Co using the same name.  The most obvious would be to give some protection to the trading name.  For example, the sole trader is "Best Roofer" and the Ltd Co is "Best Roofer Ltd".  It is a small way of trying to stop someone else starting the company "Best Roofer Ltd" and then tying to stop the sole trader form using the same name.  It also gives some record of using the name so would be a defence if a future conglomerate grew up "Best Jet", "Best Car Hire", "Best Group" etc and then trying to lay claim to any trading name "Best ....".

The forum might be better able to assist if you shared more information about what the nature of the trade is that is being performed, what the problem was with delivery and why the business owes you money.  
The first thing that needs to be confirmed is whether your contract is with the Ltd Co, or with the sole trader.

In a way, if he has confirmed that you were dealing with the sole trader business, that might be better for you.  A Ltd Co can be wound up and the assets disappear.  A sole trader cannot be wound up in the same way and all assets belonging to the individual can be pursued if there is a genuine claim.

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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

autoplay

I have been mislead in believing that I was dealing with a limited company and I am unhappy because  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.

Grumpy_chap

You seem to want there to be a law that there is not.  Such issues can only be addressed by Parliament.

There are rules about 'passing off' which prevent a sole trader using the name / brand of Ltd Co.  These rules need to be enforced by the affected Ltd Co taking action against the sole trader.  There won't be any such action when the Ltd Co and the sole trader are effectively one and the same.

Have you taken on board any of the responses up thread?

Who did you actually contract with?

What is the nature of the problems experienced?

What address is on any paperwork you do have?