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UK laws regarding disclosure of information about your business
by Startacus Admin
Legal eagle Thomas Taylor returns with another often discussed and important UK business legal issue - what are the laws regarding disclosure of information about your business. UK Startup Founders take note…
"The majority of new businesses are started using one of the founder’s homes as the office. The reasons are usually simply that this is cheapest place to run one, and that, since there are few employees, no more space than a spare bedroom or a garage provides all that is needed.
Because most people don’t want to broadcast their private residential address to the world, many businesses fail to comply with the laws on disclosure of information about their business. The idea behind these laws is to ensure that it is clear to the people you trade with, who you are.
The law says that you must display and disclose business and trading names if your business is structured as a company or if you trade under a name that is not your own personal one.
If you and your friend start a for-profit website called “KitchenSinkReviews.com” that is run from your spare room, then you would be deemed to be business partners and the law would apply.
If you started a business website by yourself under your personal name “SamSmith.co.uk” or under a reasonable variation such as “MrSmithPlumbers.co.uk”, the law would not apply.
Note that your business or trading name could be your website’s domain name, but it doesn’t necessarily have to be. You could trade as a sole trader offline as “Hoxbury Plumbing” with a website address of “HoxburyContractors.co.uk”. Both would be trading names.
Sole traders and partnerships (any business that is not a company) must disclose:
the full name of the owner or all of the partners
the address at which the owners can be contacted
You should disclose this information at your business premises (only if customers or suppliers visit you there – this probably isn’t relevant to most startups) and on all business documents including letters, orders for goods and services, invoices and receipts, demands for payment and, importantly, your website.
If your business is a company, you must give more information. You must display the company name at the registered office address (your home) and at any other location from which you carry out business, except if that place is primarily used for living accommodation.
Companies must show their registered name on:
notices and official publications
order forms, receipts and invoices
cheques signed by or on behalf of the company
orders for money, goods or services signed by or on behalf of the company
bills of exchange, bills of parcels, letters of credit and promissory notes
demands for payment
applications for licences to carry on a trade or activity
all other forms of business correspondence and documentation
In addition to this, companies must show on their business letters, order forms and websites:
the part of the United Kingdom in which the company is registered
the company's registered number
the address of the company's registered office
Additionally, certain types of companies need to make clear that they are those types (such as non-limited companies). However, most startups are not likely to need to do this.
Where the names of any individual or corporate director of the company appear on a letter, other than in the main text or as a signatory, the letter must disclose the names of every director of the company. So if you head the paper with one name, you need to include the names of all the other directors too.
Compliance and penalties
In practice, there are many businesses that don’t comply with this law. Trading Standards, who enforce it have so many other jobs, so non-compliance is less serious than with many other cases they deal with. However, if they are tipped off (by a competitor or disgruntled customer), they are likely to pursue you.
The maximum penalty if found and convicted is a £1,000 fine, and if you don’t resolve the issue straightaway, there is a further maximum daily default fine of £100.
Other related law
Also applicable to any business that trades online or through advertisements are the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013.
This is based on an EU directive, and far from clear cut.
In essence, the Regulations require a business to provide a prospective (consumer) buyer with information about who they are before the customer completes an online transaction or responds to an advert so that if there is a later problem, the customer can complain by writing to a postal address.
The Electronic Commerce (EC Directive) Regulations 2002 require a business that trades or advertises on the Internet to display certain information on its website, including the company or business name, a UK geographic address and detailed information on pricing and delivery charges.
Make sure you comply
It isn’t difficult to comply with this law. You simply have to make clear whenever you might trade with someone who your business is.
If you are unwilling to give a private home address, you could consider using a registered office address service provider – basically a company that provides a postal address at which you can receive mail.
There obviously is a cost to such a service, but you maintain your privacy."
Thomas Taylor is a director of Net Lawman, an alternative for small and growing businesses to using a solicitor to obtain legal documents. He is a qualified accountant (FCCA, FPA/FIPA).
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