Companies House: Sweeping Measures To Tackle Fraud

In a matter of weeks, Companies House will have greater powers as various provisions under wide-ranging legislation tackling corporate crime begins to be rolled out. The changes are so noteworthy that the chief executive of Companies House (CH) described the Act as a ‘turning point’ in its history. It is, in fact, the biggest reform in its 180 years.

For too long, company structures have been abused and set up by unscrupulous individuals as a vehicle for fraud, money laundering and other economic crimes to hide their true nature. The shakeup will, says government ensure a level playing field for all businesses.

The powers will come under the Economic Crime and Corporate Transparency Act 2023, which introduces various amendments to the Companies Act 2006 to help tackle fraud and wrongdoing.

In brief, likely from March this year:

· CH will have greater powers to review, query, scrutinise and reject seemingly incorrect or inconsistent information. It will also be able to remove information in some cases, such as invalid or fraudulent registered office addresses

· Where potential issues with information supplied have been identified, CH will be able to annotate the register to let users know of any issues

· CH will have greater powers to check company names

· The new rules will mean companies must have an appropriate registered office address at all times. Using a PO Box as a registered office will no longer be allowed. Invalid registered office addresses, such as those used fraudulently to set up companies, will be removed

· Companies will also have to provide a registered email address

· When forming a company, companies will be required to confirm on incorporation that they are forming the company for lawful purposes. Each year on their confirmation statement, they will then be required to confirm all its future activities will be lawful

· CH will also be able to share data with other government departments and law enforcement agencies

· CH will also have enhanced abilities to verify the identities of company directors. (We will cover this in detail in due course).

When the ECCTA received Royal Assent last October, business minister Kevin Hollinrake MP said: ‘These reforms will remove the smoke and mirrors around companies hiding behind false identities, provide further protection to the public from companies fraudulently using their addresses, and deliver better data to support business and lending decisions across the economy, enhancing the UK’s reputation as a great and safe place to do business.’

These reforms have been widely welcomed by the business community – not least because they demonstrated CH’s commitment to ensure accuracy, transparency and fairness and to prevent further abuse of the Companies Register.

What should we do?

Companies of all sizes should consider reviewing the information already filed at CH and determine if anything needs amending to comply with the new rules. Note that CH said late last year that it will be increasing fees in the new year, but no further details have yet been provided.

If you would like us to cover an issue in the next NGM Tax Law Newsletter, we would be pleased to hear from you