How to check a builder or contractor before you sign

Before a builder or contractor starts work, the business taking them on often knows little more than a trading name, a mobile number and the name of the person who came to quote. The public registers can say a good deal more when the business is a company: who runs it, what else they have run, and how those businesses ended. They can say much less about a sole trader, so the first thing to establish is which you are dealing with.

This guide is for firms that hire builders and contractors or recommend them to others: letting agents and property managers, housing associations, main contractors taking on subcontractors, architects, surveyors and project managers, and insurers and warranty providers. The registers it describes are public, and anyone can search them.

Find out who you would be contracting with

A name on a van or a website does not say who the business is, but the law requires a company to say so on its paperwork. Under the Company, Limited Liability Partnership and Business (Names and Trading Disclosures) Regulations 2015, every company must show its registered name on its business letters, order forms, invoices and other demands for payment, receipts, websites and all its other business correspondence and documents (regulation 24). On its business letters, order forms and websites it must also give the part of the United Kingdom in which it is registered, its registered number and the address of its registered office (regulation 25).

A sole trader or partnership that trades under a business name, which broadly means any name other than the owner’s or the partners’ own names, must state the owner’s name, or the name of each partner, with an address at which documents about the business can be served, on its business letters, invoices, receipts and written demands for payment. It must also give that information straight away, in writing, to anyone it deals with in the course of the business who asks for it (Companies Act 2006, sections 1200 to 1202).

So before you sign, have the business’s legal identity in writing: the company’s registered name and number, or the names and address of the sole trader or partners. A company name can match several companies on the register; a registered number matches one. The quote, the contract and the invoices should all name the same business.

Look the company up

On the Companies House service (find-and-update.company-information.service.gov.uk), search for the company’s number or name. Its page shows:

• its status, and whether its accounts or confirmation statement are overdue;
• the date it was incorporated, which you can set against how long the business says it has been trading;
• its registered office, and the nature of its business as the company declared it;
• under “People”, its directors and the people with significant control over it;
• under “Filing history”, everything it has filed, and under “Charges”, if it has any, the security it has given over its assets.

A small company’s accounts are usually a balance sheet and a few notes, and the newest on the register may describe a position up to twenty-one months old. They show what the company owed and owned at its year end, not how it is trading now; see what Companies House does not tell you.

Look at the directors’ other companies

The company in front of you is often the newest part of the story. Each director’s name under “People” opens their officer record: the appointments Companies House has linked under that name, date of birth and address, with each company’s status and the dates the person joined and left. One person often has several records, so search for their name as well; how to check a company director explains how to tell the records apart.

Read the appointments together. Companies close for ordinary reasons, and one failure is part of trading. Some patterns are worth a question before you commit:

• several companies dissolved or put into liquidation within a short time of each other;
• a director resigning shortly before a company went into liquidation or applied to be struck off;
• the same people appearing as officers of several companies that failed;
• a company applying to be struck off while its accounts were overdue;
• in a liquidation, a statement of affairs showing a shortfall to creditors, with HM Revenue and Customs or employees among them;
• a newer company with the same name as one that went into insolvent liquidation, or a similar one, described below.

None of these is a finding about anyone. Each is a question to put to the person, and their answer is part of the check.

A new company with an old company’s name

When a company goes into insolvent liquidation, meaning liquidation at a time when its assets are not enough to pay its debts and other liabilities and the expenses of the winding up, section 216 of the Insolvency Act 1986 applies to everyone who was a director or shadow director of it at any time in the 12 months before. For five years from the day it went into liquidation, unless the court gives permission or one of the exceptions below applies, none of them may be a director of another company known by a prohibited name; be concerned or take part, in any way, directly or indirectly, in the promotion, formation or management of such a company; or, in the same way, be concerned or take part in carrying on a business under a prohibited name other than through a company. A prohibited name is any name by which the liquidated company was known in those 12 months, including a name it traded under, or a name so similar to one of them as to suggest an association with it.

Breaking the restriction is a criminal offence (section 216(4)). A person who is involved in the management of a company in breach of it is also personally responsible, jointly and severally with the company, for the company’s debts and other liabilities incurred while they were involved (section 217).

The exceptions are in Part 22 of the Insolvency (England and Wales) Rules 2016, which is why a similar name is a question rather than an answer. One applies where the whole, or substantially the whole, of the business is bought from the liquidator, or under arrangements made by an administrator, administrative receiver or supervisor of a voluntary arrangement before the liquidation, and the director gives notice to the old company’s creditors and publishes it in The Gazette before acting (rule 22.4). Another applies where the other company had been known by the name for the whole of the 12 months before the liquidation and had not been dormant at any time in them (rule 22.7).

The other registers to search

• The register of disqualified directors, on the same Companies House service under “Disqualified officers”. See director disqualification.
• The Individual Insolvency Register, kept by the Insolvency Service: bankruptcies, debt relief orders and individual voluntary arrangements in England and Wales. It can be searched by a person’s name or, for a sole trader, by trading name. Records are usually removed within three months of a case ending.
• The Gazette, where petitions to wind up a company must be advertised (see winding-up petitions) and bankruptcy orders are published.

Sole traders and partnerships

Many builders trade on their own account or in ordinary partnerships, and neither is registered at Companies House. (Limited liability partnerships and limited partnerships are.) Nothing above about companies and directors applies to them. What the public record holds about a sole trader is the Individual Insolvency Register and The Gazette’s personal insolvency notices, and only if there was a bankruptcy, a debt relief order or a voluntary arrangement; the Individual Insolvency Register shows a case only while it is current or recently ended.

A person whose earlier businesses ended owing money, without any of those, has no entry on a public register. An empty search shows that nothing is registered, not that nothing happened. County court judgments, which can follow an unpaid debt, are recorded on a separate register, the Register of Judgments, Orders and Fines.

If you are checking a builder for your own home

Check the Director sells reports to businesses, for business use, and not to people checking a builder for their own home. Everything this guide describes is on public registers that anyone can search, and the Companies House service, the Individual Insolvency Register and The Gazette cost nothing to search. The most useful single step is the first one: before you pay a deposit, ask in writing for the company’s registered name and number, or the sole trader’s name and address.

In a report

A Check the Director report on a person starts from their Companies House officer records. It links the records and shows its confidence in each link, you confirm which are theirs, and it reads the filings of every company they have been an officer of, citing each figure to its document, and to the page where there is one. The patterns above are among its twenty-eight published criteria: F02, “Insolvency during or within 12 months after office”; F03, “Deficiency to creditors including HMRC or employees”; F07, “Strike-off applied for with accounts due or overdue”; F11, “Three or more dissolutions within 12 months”; F13, “Left office within 6 months before insolvency or strike-off”; and F26, “A person who recurs at the subject’s companies that failed”. Each criterion met comes with a neutral question to put to the person. The report also checks the register of disqualified directors for each record you confirm, and searches the Individual Insolvency Register and The Gazette’s personal insolvency notices under every name the person has used at Companies House.

A report on the company itself names its officers and people with significant control as the register does, checks each officer against the register of disqualified directors, and reads the company’s own filings. Because a report starts from Companies House records, it cannot be run on a sole trader who has never been a company officer. See the sample report for what a report looks like, and pricing for what it costs.

This guide describes the public record in general terms, for England and Wales unless it says otherwise. It is not legal advice.