Closing a LTD company and then becoming a sole trader?

[W4NTED]

Is the above scenario even possible? I am about to place an order for a bespoke item and upon doing some google research before handing over my money I can see that the LTD company name for the company I was about to hand over a deposit to was dissolved in 2010. Their website etc does not state XXX LTD it just states XXX. There is no trading as or alias coming up either,

They have already told me they are not VAT registered so not VAT to be paid however I find it weird that they are using the same trading name as the LTD company that was shut down in 2010 and are openly using social media accounts (with a lot of followers!!) to drum up business. I have done an online director search on the person who is the front of the business using various platforms such as Duedil and it comes up showing this person having been a director of 5 other companies and has resigned from all in the past 4 years.

Am I being over cautious or do you too smell a rat?

[Eric Mc]

Legally there is nothing wrong with a sole trader currently using the trade name of a limited company he once had in the past but has since closed down.

However, I think caution might be the by word here as there does seem to be a bit of a pattern on display.

[W4NTED]

Thanks Eric. It seems like there is an open loophole here that people can exploit for tax evasion!

Almost anyone can open a LTD company, close it and continue trading using the same name and not register as a sole trader? Who knows if they have registered as a sole trader or not....hmm...Strange.....

Edited by W4NTED on Wednesday 19th October 17:19

[Jasandjules]

Are they proposing you are invoiced by the LTD company or not?

[C Lee Farquar]

W4NTED said:

Thanks Eric. It seems like there is an open loophole here that people can exploit for tax evasion!

Almost anyone can open a LTD company, close it and continue trading using the same name and not register as a sole trader? Who knows if they have registered as a sole trader or not....hmm...Strange.....

Edited by W4NTED on Wednesday 19th October 17:19

If they are below the VAT threshold then they don't need to register for VAT.

The sole trader will be liable to pay income tax on his profit, I don't see a loophole.

However, the pattern of behaviour with the other Companies would have me proceeding with caution.

[Eric Mc]

W4NTED said:

Thanks Eric. It seems like there is an open loophole here that people can exploit for tax evasion!

Almost anyone can open a LTD company, close it and continue trading using the same name and not register as a sole trader? Who knows if they have registered as a sole trader or not....hmm...Strange.....

Edited by W4NTED on Wednesday 19th October 17:19

There's no loophole. If a person wants to trade as a sole trader using a "trading as" type name - that is totally legitimate. Of course, all sole traders need to ensure they return their business profits (or losses) under the Self Assessment tax return system. From what you describe, there is no indication that this trader is not doing this.

If a sole trader fails to notify HMRC that he/she is trading, they are not exploiting a loophole - they are just not complying with tax rules.

[bazza white]

Possibly semi-retired, just enough business to keep him ticking over and keeping it simple with sole trader.



The ltd company may have been vat registered but a decline in business may have put him under the threshold but hmrc declined him to stop being vat reg.

Edited by bazza white on Thursday 20th October 09:26

[Eric Mc]

I doubt that HMRC would have declined him being VAT registered - if he genuinely was trading below the de-regsistration thresholds.

[dartissimus]

Pay by Paypal or credit card not debit to have protection

[W4NTED]

dartissimus said:

Pay by Paypal or credit card not debit to have protection

He wants Payment by Bank transfer or cash only!

[dartissimus]

W4NTED said:

dartissimus said:

Pay by Paypal or credit card not debit to have protection

He wants Payment by Bank transfer or cash only!

He'll probably offer to Tarmac your drive for free with a 30 year guarantee to show goodwill

[Simpo Two]

W4NTED said:

He wants Payment by Bank transfer or cash only!

Well, as he's a sole trader and not hiding behind a limited company, if the deal goes wrong you can sue him personally. Depending on the value/nature of the product perhaps you could offer a deposit with order and balance on delivery.

I see 'limited company' as a much shadier way for shady people to operate than as sole trader.

[Andehh]

W4NTED said:

it comes up showing this person having been a director of 5 other companies and has resigned from all in the past 4 years.

That would worry me, if large sums of money were involved. Especially not knowing the back stories behind it.