Disclosure of Limited Company Status

Disclosure of Limited Company Status

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The details are that a business was provided with goods & services by another company and an annual maintenance agreement was signed by the business receiving the goods and services in 2009. The name of the business receiving the services, for the purposes of my question, is ABC & Co. The annual maintenance agreement was signed by Mr ABC (who also printed his name on the agreement) and printed his position on the agreement as 'OWNER'. Each year since, the annual service has been done and the service was signed for by a member of staff at ABC & Co and payment subsequently received.  

However, in January 2014 the service was carried out as normal and accepted and signed for at ABC & Co but no payment was received and no communication from him querying the invoice. When credit control chased the debt they were told by Mr ABC that 'because ABC & Co had moved premises they were not receiving the benefit and he didn't see why he should pay'. A different business, he said, had operated from the premises since January 2014 and so he shouldn't have to pay. Service paperwork signed at the premises was clearly made out to ABC & Co and signed for by the receptionist. ABC & Co's name was also still on the shop front of the premises and still is. Who the receptionist is, in terms of whose payroll she was on, can only be properly ascertained via legal action I assume (see later).

He was subsequently emailed on an official email (company footer, etc included, as they are on all emails as standard and in line with company requirements), requesting his reasons for non-payment. There were a few emails back and forth and he says in a later email that staff must have entered the property without authorisation and that it wasn't his signature on the paperwork, this was despite the fact that his staff had signed for work done  in previous years and he had paid the invoices without any questions. It was obvious he didn't want to pay and he was informed that there was no choice but to put the matter in the hands of the court. He then says that ABC & Co was the trading name of a limited company who had ceased trading on 31/08/13 ( none of his emails contained any business information whatsoever other than his own name, not even the trading name) and that he could not be chased personally.

I checked out the Ltd Co name he gave and downloaded a set of accounts for Y/E 31/03/2013 from Companies House. The accounts were signed off in November 2013 (by Mr ABC AS DIRECTOR)  with no mention at all of the cessation of trade on 31/08/2013 and there was a very healthy balance sheet. To put this into context I am A Chartered Certified Accountant and ABC & Co are Chartered Accountants. Their website to this day still has no mention of being a limited company but Mr ABC says he has now moved and trades via a different Ltd Co.

I am very loathe to involve a professional association but the signing of the order as 'Owner', refusal to pay, not notifying or making known Ltd Co status, non-disclosure of cessation of trade and Company Disclosure requirement infringements are leading me that way and quite frankly are not what I would expect of a qualified accountant.

My biggest question to begin the process though is, should court proceedings be commenced against the individual or the company name he has given ( for the purposes of the debt). It was always believed that trade was with an individual, he did after all sign as 'OWNER'. I believe it would be against Mr ABC because he represented himself as such. Despite him saying the company who traded as ABC & Co no longer trade, ABC & Co is still prominently displayed at that office and nothing seems clear.

Can anyone offer their thoughts please in respect of who to name in court proceedings and also on the non-disclosure of the 'cessation of trade' as a post balance sheet event ( I would consider a cessation to be very 'material' for that purpose) and also the infringements of Company Disclosures.

I realise there are legal issues involved in this query, as opposed to strictly accounting and tax, but there are also professional standards to be considered by someone who should clearly have some understanding.

Many thanks

Replies (5)

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By bernard michael
29th May 2014 09:03

The proceedings are against whoever the contract is with. In this case it appears to be Mr ABC

unless the contract was novated  to the Ltd Co with the agreement of both parties.

Is the contract a rolling 12 month one with a notice period??

It sounds a very simple situation but but even so I'd let a solicitor deal with it

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By Richard Willis
29th May 2014 09:23

Definitely Mr ABC

It is a fundamental rule of contract that one deals with whoever is 'in front' of you, in this case Mr ABC.  He cannot later claim that it was a limited company all along.  Just out of interest, how were the previous bills paid?  What was the name on the cheques or bank advice?

I would just find out his home address and bang in a claim on Moneyclaim Online. Don't forget to claim interest!

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Stepurhan
By stepurhan
29th May 2014 09:28

Paperwork

None of the paperwork you have in connection with this mentions the company. This is in breach of company law, which is something your customer should have been fully aware of.

I would be inclined to say that, based on the lack of mention of the company, your contract was with the individual direct. All your paperwork indicates that they are a sole trader, and I think that, regardless of whether the name was a trading name used by the company, you entered into the contract on that basis.

Your most obvious weakness is that the owner has not signed for the disputed service. Regardless of whether the contract is with the individual or the company, there is an argument that the person signing off on your work had no authority to do so. The same thing happening in previous years, and subsequent payment, gives you precedent, but you may still have problems.

As you say though, definitely more a legal question and I wouldn't take any further action without legal advice.

Why are you loathe to bring the professional association into matters? If someone is behaving unethically (and this sure sounds like that) it is in all our interests that they be brought to account for that. They may be a different qualification to you, but any qualified accountant behaving badly reflects on all qualified.

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By itsdago
29th May 2014 21:31

Thank you all for your comments, they are very much appreciated.

Believe it or not, today he agreed to pay the amount in question but his behaviour is still way below what is acceptable from anyone in business and certainly below what is to be expected from a Chartered Accountant. The amount involved was quite small but the man's behaviour was unbelievable and he refused to accept he could be wrong which really made me angry especially when he said the limited company had ceased trading, as if that would absolve the company from liability. The company was still alive with a healthy balance sheet. Having pointed that out to him he then came back with an answer that another company was at the premises when the work was done and so why should he pay. I traced that company this morning and it's another company owned by him and of which he is director!  A note on the old office door directs people to the new premises and new trading name.

I emailed him this morning and pointed that out to him and that the ICAEW would also be contacted and non-compliance with Companies Act requirements and regulations would be reported and he emailed back agreeing to pay!!  That in itself tells its own story. (Still no company info on email though despite me pointing it out to him several times in previous correspondence)

I agree with stepurhan when he says we should protect the profession but it's still something I would prefer not to have to do. However this case, seems to be on the face of it,  a blatant attempt to avoid paying creditors and brings the profession into disrepute amongst other things.

I'm especially grateful for the replies because the query was slightly unusual and off beat.

Many thanks

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By bernard michael
30th May 2014 08:34

If he is  a member of ICAEW

If he is  a member of ICAEW he probably reads AWEB hence his capitulation

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