Companies House to Verify Director Identities
A big reform was recently announced for Companies House which could affect your business. Companies House announced that company directors will need to have their identities verified before they are added to the register.
This new change will grant Companies House the power to query and reject information to improve the quality of its data.
A Clampdown on Financial Crime
This move is a clear attempt to combat financial crime such as fraud. It will also help law enforcement to trace suspicious activity when it comes to suspected business fraud or money laundering.
Lord Callanan, the minister for corporate responsibility said, “Mandatory identity verification will mean criminals have no place to hide – allowing us to clamp down on fraud and money laundering and ensure people cannot manipulate the UK market for their own financial gain, whilst ensuring for the majority that the processes for setting up and running a company remain quick and easy.”
Greater Assurance for Businesses
The change will also provide businesses with greater assurance that they know exactly who they are dealing with.
The government says that the Companies House register has been accessed 9.4 billion times in the last year alone, suggesting that this information is widely used and relied on. A report last year suggested that the value of Companies House data is up to £3 billion per year. According to the report, mid to large companies attributed £23 million of their revenues to the use of Companies House data.
Previously, there has been little assurance that the details on director identities at Companies House is correct. With businesses relying on this data, this may have already caused problems that have simply gone under the radar.
Louise Smyth, chief executive of Companies House said, “We know how valuable our data is, not just to businesses but to law enforcement and these reforms will unlock that value even further. Driving confidence in the UK economy is at the very heart of our plans to modernise Companies House, and we already have a substantial transformation programme in place to bring the government’s ambition to life.”
What Does This Mean for Your Business?
The Department for Business, Energy and Industrial Strategy (BEIS) says that these changes “will require primary legislation which will happen in due course”. However, there has been no mention of how or when these changes will be implemented.
At the moment, it is unclear whether this new rule will apply retrospectively to root out previous false entries in the register. It looks like, for now at least, that the new rules will only apply to new companies registering with Companies House. However, this would mean that only some of the entries on Companies House are 100% correct.
If you are a new business registering with Companies House, these new changes will potentially slow down your application. However, a statement from the government suggests that most companies will still be incorporated within 24 hours. The announced changes will reportedly have little to no effect on the time it takes to register.
Anyone concerned about registering a new business is advised to seek out professional advice. Enlisting the help of an accountancy firm which offers company incorporation such as BrooksCity is the best way to ensure everything is done correctly.
For existing businesses, a dedicated accountant will also keep you aware of any changes to Companies House rules, should these new rules apply retrospectively.