When a sole trader or limited company asks a debt collection company for assistance in finding UK debtors, they should be aware of the difference between the two forms of business. AR Legal Collections will help you with this information.
The main difference relating to the collection of bad debt, is that a sole trader is solely liable for the debts the business runs up, and so can be traced and pursued for any of that debt. A limited company, as is suggested by its name, limits the liability of shareholders so that they will not have to pay more towards any debts than they have already paid to be shareholders, or have agreed to pay to be shareholders. In this case, the liability for debt lies with the company itself.
Finding UK debtors, when looking to trace a company debt, may initially appear to be straightforward. Legally, limited companies are obliged to register with the central database at Companies House and file an annual return, together with their accounts. The database holds details of company directors and contact details. However, there is nothing to prevent directors of a company that has debts that cannot be paid, winding the company up and starting another one. In this way, they can leave the debts of the previous company behind. However, if there were to be something untoward in the conduct of that company’s affairs, its director or directors can be barred from being a director again, for a period of time. This may be the case, for example, where appropriate accounting records have not been kept, or where the business has failed to pay any taxes owed.
AR Legal Collections will advise as to the best course of action in tracing companies owing corporate debts and the more information you are able to provide, the more chance they will have of finding the debtor and recovering the money that is owed to you.
For more information, free initial advice or a general discussion, please contact AR Legal Collections on +44 (0)20 8202 0730.