Dormant companies

[Gordon Brown]

I had a call, rather out of the blue (referall through an asiociate of an associate) from a company asking me to partner with them in a bid to get some work from a large public sector orgainsation. Not much work but basically they want me to do the design and they will do most of the operation with my QA.


Their web site has no staff names nor contact address ( which is now illegal right?), just a 0870 number. I have run them through companies house and the registered company of that exact name is 'dormant' as of Jan 2007.

It may be that the dormant company has started to trade but the work they want me to tender with them on is with a previous client of theirs and my contact speaqks as if she is clearly an employee. The web site lists a number of councils as clients ( and the AA) which suggests that they have been trading for a while at least.

What exactly does dormant mean? Is it likely they have simply switched work from another company to this one for some reason?

[Eric Mc]

In Company Law, "Dormant" means "doing nothing". It means that the company isn't trading and there are no transactions of any sort being carried out.

Obviously, a "dormant company" can become a "live" company at any time - and the data shown at Companies House is never absolutely up to date.

[Gordon Brown]

Eric Mc said:

In Company Law, "Dormant" means "doing nothing". It means that the company isn't trading and there are no transactions of any sort being carried out.

Obviously, a "dormant company" can become a "live" company at any time - and the data shown at Companies House is never absolutely up to date.

Thanks Eric, I think that as it is likely that they will expect me to do development work and get paid at the end of the project I will ask them to clarify the situation if we get the work because they seem quite new to the sector and my reputation as well as theirs is at risk if they are over stretched in this first year ( lets hope their cashflow problem doesn't become my bad debt?).

[LivinLaVidaLotus]

You'd be surprised at the number of companies that pull this "dormant" scam. They form all contracts with customers/suppliers under the name of the Ltd. company, but all trading is carried out as a sole trader/partnership and money banked as such - they then file dormant accounts with CH. If they ever get in to trouble, they fold the Ltd. company and suppliers/customers only recourse is to sue the directors personally - and most won't/can't be bothered. It's especially prevelant in the world of Web Hosting/Web Services and it really does need cracking down on.

[Gordon Brown]

LivinLaVidaLotus said:

You'd be surprised at the number of companies that pull this "dormant" scam. They form all contracts with customers/suppliers under the name of the Ltd. company, but all trading is carried out as a sole trader/partnership and money banked as such - they then file dormant accounts with CH. If they ever get in to trouble, they fold the Ltd. company and suppliers/customers only recourse is to sue the directors personally - and most won't/can't be bothered. It's especially prevelant in the world of Web Hosting/Web Services and it really does need cracking down on.

I might just clarify the staus before we go any further. Thanks for that.

[Gordon Brown]

Transpires the dormant comopany is one of the names they trade under but the holding company are indeed trading. Seems slightly odd as the holding company are not exactly ICI ( turnover 400K, net about £50K).