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Builder does not have ltd company


LV0210

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Hi,


I've had a builder come round to quote for renovating my house. He doesn't appear to have registered his business as a limited company as I can't find his business in the Company House register.


What does this mean to me if something were to go wrong during the build process and should it be a red flag?


Many thanks!

If he has a limited company he has liability limited to what he has invested in the company.If something goes wrong and you try to sue his company then he can just dissolve the company and start another one with a different name.


If he is a sole trader and you sue him and win can take everything he owns to cover your debt.


I would focus on making sure that he has the correct insurance rather than the type of company he has.

Thanks for your reply Chris.


I did like him but feel nervous as I don't know the business history, financial background etc. I will be spending all of my life savings on this renovation so there is a lot at stake for me.


Is it unusual for a builder who claims to have been in the industry for over four decades to trade as a sole trader? He says he has a team of people that work for him.

A company doesn't have to be limited to be registered at companies house, but it would be considered good form to register. He must though be registered as self employed with HMRC and have insurance. If he is subcontracting work then he is classed as a contractor and needs to be registered with the Construction Industry Scheme (CIS).


https://www.gov.uk/what-is-the-construction-industry-scheme

I agree with the second post by Chris. In a way, the protection available to you is greater if you are dealing with a sole trader (or a partnership, which also has no registration requirements). I sole trader can still have people working for them.


I'm not certain as to whether it is typical, but I imagine it is not uncommon. There are disadvantages to trading via a company, such as double taxation (the Company would pay corporation tax and the builder (as a shareholder) would have to pay income tax on any salary / dividends that he pays himself. As a sole trader, however, would only pay income tax.

Blah Blah Wrote:

-------------------------------------------------------

> A company doesn't have to be limited to be

> registered at companies house, but it would be

> considered good form to register. He must though

> be registered as self employed with HMRC and have

> insurance. If he is subcontracting work then he is

> classed as a contractor and needs to be registered

> with the Construction Industry Scheme (CIS).

>

> https://www.gov.uk/what-is-the-construction-indust

> ry-scheme



I wouldn't say that good form comes into it. Working in the insolvency business, I see a lot of contruction firms being liquidated, I'm not aware of any sole trader builders in my portfolio. Not having limited protection is likely to keep a trades person on the stright and narrow rather than causing adverse effect.

I'm not a builder, but I am a sole trader. There's lots of reasons people set up as ltd v sole trader. Usually tax related but it has nothing to do with the work they provide.


Instead I'd look for positive reviews and references, and where necessary membership of professional bodies.

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