Scams, Dormant & Off The Shelf Companies

On Monday we published information on the latest cold caller in the “claims & exits” field, a company which we found to be registered but “Dormant”. According to the Company House website, they simply explain with this sentence  “Your company or association may be ‘dormant’ if it’s not doing business (‘trading’) and doesn’t have any other income, for example, investments.”  In other words, does the company actually exist apart from on paper?

There are different reasons why a company may be dormant, 

  • Corporation Tax and Company Tax Returns
  • Annual accounts and returns for Companies House if you have a limited company

The following link gives basic explanations of the different reasons, with relevant links to further information.

In a nutshell, any company that begins trading must comply with all the regulations, such as submitting accounts and tax returns, just like any company that is in business and trading. Yet over the years, we have seen so many scams which have used “registered dormant” companies to give themselves credibility as a UK Registered Company. But as we found in our article, it is not until you delve past the company registration page and into filing history that you start to get the full picture.

In our example, Sonata Trading Limited was formed in 2009, since 2010  it has filed each and every year as a “Dormant Company”,  yet here it is trading as Sonata Administration Services. It has also had a change of Director around 13 times, again that does look suspicious.

This is not the first time the name of a dormant company has come up, over the years we have seen many timeshare scams where in any basic search they appear legitimate. So is this a case of just finding a suitable name for a dormant company and just using it to begin trading or is it a case of buying the company “off-the-shelf”?

It is probably a bit of both, although there is a thriving market for off-the-shelf or ready-made companies, not just UK companies but Spanish and even off-shore entities. It is also relatively simple to purchase one and have all the documentation processed and names changed among other things, all for a fairly low price.

We had a quick search of the internet and out of all the hits we have chosen four companies that specialise in this field. The first is CFS International Formations Limited. This company offer an extensive range of services, from UK Company Formation to Off-Shore Company Formation, and of course “ready-made-companies”.

Prices start at £95.95 for a 2022 registered company and go up with age with two 2015 companies showing a price of £1,445. According to their website, it also looks like a fairly quick and simple process to register.

“The Ready Made Companies we have available are ready to trade as soon as they are changed in to the new owner’s name. Once ordered, you will be required to complete an online application form with the new company details:- director, shareholder etc. As we have a fully automated system, the transfer of the company is usually the same day as the new details being entered. Once completed, an up-to-date company register and Certificate of Incorporation are emailed to you.” 

So make your choice and begin straight away.

The next example is the website Companies Made Simple which is a company called Made Simple Group Ltd.

The website opens with the title

Shelf Companies – Purchase a ready-made company today

Ready made companies with no trading history (dormant companies), ready for you to take over

Straight to the point, telling you exactly what they are providing, the link below takes you to that page where they explain what they offer and the services included in the package. The example they give is for two packages, Standard and Premium.

Standard is £99 for a 2022 company and Premium costs £149, for the 2021 company, Standard is £149 with Premium at £199. After the example of the prices, they do address the question of “Identification”, but as they say, they do have a legal obligation to check, but once you see the checking process, all becomes clear.

There is a comprehensive list of forms of acceptable ID, along with what is required for proof of residency, such as utility bills. As the “validation” process is done online, they do require the named person to be present for a photograph as they take over your computer’s camera, (I’m not techy, so I can’t explain it). You will find the link with the details of validation at the end.

Our next company in this area offers Spanish Companies, Lexidy Law Boutique SLP.

Their Home Page gives all the basic information in one place, with a “quick facts” chart, what type of companies are available, Steps of formation and the advantages of having a Spanish-registered company.

They do not however show any prices, there is a link where you can request prices, but from what we have seen so far, they will all be about the same.

Our last example caught our eye as it showed companies from around the world not just in Europe, including the UAE and Singapore. The company Eternity Law International apparently operates out of Kyiv and the website shows no company registration or registered address or any other details you would expect. The “Contacts” page gives a list of countries with addresses and telephone numbers, but it looks like everything is done online as is the case with all the others.

The online validation is really just a joke, the person whose identity is being “validated” may just be another dupe, the real crooks behind the scams are not going to put their face and names to any company. Company directors are employees of the company, they have certain obligations which we covered in a previous article Registered Companies: Directors Responsibilities, Liabilities & Risks, with some clauses which could absolve them of any wrongdoing.

One advantage of purchasing this type of company is the speed and cost compared to forming a new one, it also has an advantage over just hijacking a name, it is also an asset which can at a later date be resold.

These examples and our previous articles show you just how careful you have to be, not just checking to see if they are registered, but look at filing history, anything untoward there, check the officer’s list, have they had frequent changes of directors?

All these are points which will help you to form a decision based on evidence not what the cold caller has told you, if it looks dodgy, it probably is.

None of the companies named here is doing anything illegal, the sale of company names is an old one, it is how they are eventually used which is the problem.

CFS International Formations Limited

Companies Made Simple – Made Simple Group Ltd

Lexidy Law Boutique SLP

Eternity Law International

If you require further information or just need some help in checking any company that you are not sure of, please use the details on our contact page and we will get back to you.


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