Article written by James McKimm, Solicitor, Corporate and Commercial
A registered office address to which all communications and notices may be addressed is a legal requirement for any limited liability company under Section 86 of the Companies Act 2006, and officers of a company are also required to provide a service address which is available to the public and at which they may be contacted.
Because of these requirements, side hustles, start-ups and other virtual businesses looking to avoid fixed premises costs often turn to third-party mailing services to help with their need to make sure they have an address where everyone can reach them. In this article, we consider some of the pitfalls in using a third-party mailing service as your registered office or service address.
A higher number of businesses are using so-called ‘virtual’ addresses as their registered office address or officers’ service address to avoid using their home address on business correspondence or it being displayed on the public register at Companies House, an issue addresses in my previous article which can be viewed here.
However, many mail handling services restrict their service to cover only identifiably ‘official’ correspondence such as from HMRC or Companies House. This can create problems as whilst using a third-party mail handling service is legal, company directors have a responsibility to ensure the service they buy complies with their legal responsibilities.
Therefore, using this type of restricted service, where non-official mail is returned to sender or simply destroyed, could mean that companies and their officers are breaking the law, if letters from consumers never reach the attention of the business they have been sent to.
As well as obligations under the Companies Act, any limited liability company that uses a registered office address through a service provider and knowingly agrees to receive only ‘official’ correspondence could be committing an offence under Regulation 8(1) of The Consumer Protection from Unfair Trading Regulations 2008. This hazard was highlighted recently by the City of London Trading Standards Service, where many providers are based, and they are urging companies to check exactly what they have signed up for.
This is just one aspect of company formation and operation that may not be identified in the excitement of getting a new business off the ground. Without previous experience, founders may not realise the very real responsibilities that a company director carries. Making sure that all post can reach you is one very simple thing to get right, and the cost of getting it wrong could be significant. It’s not just potential penalties, it’s a black hole in customer service terms, which can directly impact reputation.