Protecting your business name

You work hard over a number of years to build up your reputation and then somebody comes along and sets up a practice just round the corner from you and uses a very similar trading name. What can you do about this?

The answer is not very clear cut.

Legally there is an offence called ‘passing off’ which has a common law remedy but doesn’t actually help you until after the damage has been done. (http://en.wikipedia.org/wiki/Passing_off). It can be expensive to pursue and the outcome is never guaranteed.

There are various ‘Business Names Registers’; over the years I have had feedback from various clients who have used these agencies and had issues with other people trying to take their name. The outcomes are varied and none of these have any actual direct legal powers. The better ones will write what appears to be an official letter and quite often the offender backs down.

The surest way to protect a name is to set up a company with that name. This doesn’t actually mean that you have to trade through the company; whether you do so or not is a question of the comparative compliance costs (including accountancy fees) as against the relative tax burden. However, once you have formed a company, nobody else can use that exact name.

Nowadays companies can be formed relatively cheaply so this may be a worthwhile expediency. If you do set up a company and not use it, please be aware that certain documents still need to be filed annually – the company annual confirmation statement and a set of dormant accounts.

Overall, this is a relatively easy way to protect your name but you need to be aware that generally Companies House will allow a very similar name to be set up. For example – suppose you form a company called Browns Healthcare Ltd. Companies House would allow someone to set up as Browns Healthcare (London) Ltd or Browns Healthcare (UK) Limited. It is even possible that you could include the name of your town or village in your company name and someone else could set up using the name of the next town or village.