The Business Names Act - Uncovered
Find out about the legal requirements when you use a trading name
- and potential problems if you don't comply
United Kingdom
Are you carrying on business as a sole trader, partnership or limited company?
Do you use a trading name? What are the legal implications if you do?
Up until 1982, businesses in the UK had to provide the owner or owners’ details for inclusion in a public register. Today the only legal requirements for registration of business names apply to limited companies, PLCs, other types of companies and limited liability partnerships – ‘LLPs’.
The Business Names Act 1985 now governs the use of trading names and what information must be disclosed to identify the business owner or owners behind the trading name.
This Act applies if you are a sole trader, partnership or a limited company whenever you carry on business under a trading name.
Note:
A company in Birmingham called National Business Register Plc runs a website offering a ‘Certificate of Registration' as part of a business services package for which it makes an annual charge of £70.50 including VAT.
It is no longer a legal requirement to register the name of a UK business unless it is a company or a limited liability partnership: in these cases the name is registered by Companies House and they issue a certificate. In other cases a certificate of registration for a specific business name is not required by law.
What is the Business Names Act?
- The Business Names Act 1985 applies when you carry on a business under a name which is different from the name(s) of the business owner(s). I.e. When a sole trader, partnership or company uses a trading name. For example –
- Able Construction, XYZ Associates, B&C Design Partnership
- or Greenbee - a trading name of John Lewis plc.
- The choice of trading names for sole traders, partnerships and companies
- Information these businesses must disclose on their orders, invoices, receipts and other business documents
- What must be displayed at their business premises
- And information they must give to people who ask for details of the firm’s ownership.
The risks of not complying
Enterprises have a lot of good will tied up in the business names they use, so there are fairly frequent (and costly) disputes between business owners over their trading names and website names.
French Connection famously brought a court case against the owner of First Consultants UK which had a website called 'fcuk.com'. In that case the judge refused to prevent the domain name owner from continuing to use this four-letter website!
In another case the registered owner of 'fcuklifestyle.com' was less fortunate and was ordered to give up his website domain name.
The owner of Harrod’s department store in Knightsbridge has also brought several legal actions to deter others from trading on its name and reputation. Harrods Catering Specialists, a family firm in Ecclesfield, make it very clear on their website that they have no connection with Harrod's of Knightsbridge!
French Connection, Harrod's and other companies are fiercely protective of their business names and trade marks. Disputes between small businesses are quite frequent too, especially when a competitor moves in with a similar trading name.
There are further legal requirements affecting owners of businesses that operate under trading names. Non-compliance could result in contractual problems and financial penalties too.
What if I don’t comply?
If you enter into a contract under a trading name and do not make your full business details available, you may discover you are not able to enforce the agreement. This might leave you seriously out of pocket.
Failure to comply with the Business Names Act 1985 could also be a criminal offence and may lead Trading Standards to prosecute, with a fine of up to £1,000 - plus the adverse press publicity. There may also be a continuing penalty until you do comply.
Prosecutions under the Act by Trading Standards are few and far between but the risks of disputes over contracts and trading names could prove very costly.
What should I do to comply?
First of all the trading name of your business –
What trading names can you use and which ones can't you use?
And can you use two or more trading names?
Click here to learn more about The Business Names Act – Trading names
About the author:
Mac McInerny is a director of MC Management & Communications Ltd and topenterprise uk ltd. He has a degree in Law and his formal training includes sales, marketing and financial and management accounting.
topenterprise uk ltd acknowledges the trade marks and intellectual propert y rights of the owners of the businesses named in this article.
© 2008 Copyright topenterprise uk ltd
Property of topenterprise uk ltd and made available under the terms of use notice on this web site
Footnote
This article is intended to contribute to informed decisions by business owners, directors and managers. It does not constitute professional advice in all individual cases and should not be interpreted as giving specific advice or guidance.
Before making a decision to take any action you should make your own appropriate enquiries and seek legal, financial and other relevant advice from a qualified person or body. See terms of use for further information.
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