Business post must always get through
Side hustles, start-ups and other virtual businesses looking to avoid fixed premises costs need to make sure they have a mailing address where everyone can reach them.
Many companies use so-called ‘virtual’ addresses to avoid using their home address on business correspondence or on the public register at Companies House, but many mail handling services restrict their service to cover only identifiably ‘official’ correspondence such as from HMRC or Companies House.
But using this type of restricted service, where non-official mail is returned to sender or simply destroyed, could mean companies are breaking the law, if letters from consumers never reach the attention of the business they have been sent to.
A registered office address “to which all communications and notices may be addressed” is a legal requirement for any limited liability company under Section 86 of the Companies Act 2006.
Where there are no physical premises, a company director’s home address can be used for the registered office, but many prefer to keep that private, instead using a mailing service provider. Using this sort of service is legal, and statutory requirements under anti-money laundering legislation govern their use, but company directors have a responsibility to ensure the service they buy complies with their legal responsibilities.
As well as obligations under the Companies Act, any limited liability company that uses a registered office address through a service provider and knowingly agrees to receive only ‘official’ correspondence could be committing an offence under Regulation 8(1) of The Consumer Protection from Unfair Trading Regulations 2008. This hazard was highlighted recently by the City of London Trading Standards Service, where many providers are based, and they are urging companies to check exactly what they have signed up for.
Said company law specialist, Adam Gilbert, Partner and Head of Corporate and Commercial of Newark based solicitors, Chattertons: “This is just one aspect of company formation and operation that may not be identified in the excitement of getting a new business off the ground. Without previous experience, founders may not realise the very real responsibilities that a company director carries. Making sure that all post can reach you is one very simple thing to get right, and the cost of getting it wrong could be significant. It’s not just potential penalties, it’s a black hole in customer service terms, which can directly impact reputation.”
“A regular company health check with a professional is a good idea, as it’s not just at set up where directors need to check they have covered all bases: legislation is always changing and a growing company may have additional responsibilities”.
Limited companies also need to ensure that they comply with the Companies (Trading Disclosures) Regulations 2008. This brought together various regulations from different areas of law to set out all the ways in which a company must make public its registered name and other registration details, and how the company must respond to enquiries.
This includes that all business letters, order forms or websites must include the registered company name, place of registration, registered number and address of registered office. The registered name must also be displayed on communications such as notices, cheques, orders for money, goods or services, invoices, receipts and other forms of business correspondence or documentation including signage at premises.
He added: “For sole traders and partnerships there are fewer rules, but there is still a requirement to make sure that customers and suppliers know who they are dealing with and how to make contact.”
Where business is carried on under a trading name, then the full name of the owner or partners must be displayed, together with an address where correspondence can be received, and legal documents served. This must be displayed at any premises where customers visit, and included in any communication, such as letters, invoices and the business website. Larger partnerships do not have to list all named partners if they make the list available via other routes.
A member of the Corporate law team here at Chattertons would be happy to discuss confidentially any thoughts you are having on a free, no obligation basis.
This is not legal advice; it is intended to provide information of general interest about current legal issues.