New measures as Companies House get tougher with shadowy directors
The main headline from the Corporate transparency and register reform consultation is that Company Directors will now have to have their identities verified before they’re officially listed on the Companies House directory.
Introducing compulsory identity verification for directors, People with Significant Control and those filing information on behalf of the company is the most significant of the proposed enhancements to the system.
Some of the others include:-
- Strengthen Companies House powers to provide the Registrar of Companies the ability to query, seek evidence for, amend or remove information on directors and be able to share it with law enforcement partners if certain conditions are met.
- Improving processes for removing inaccurate personal information from the register and protecting directors personal information
- Further consultation on strengthening company financial accounts including full digital tagging to ensure consistency, easier identification and comparability of information held on the register.
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.”
We’ve already written about how seriously HMRC and the government are taking instances of furlough fraud which has cost the Treasury at least £3.5 billion. To 15 September 2020, HMRC have already recouped £215 million in furlough payments made in error.
One of the weak spots in the authorities defences against illegal activity has always been the credibility given to information reported by Companies House.
Being unable to verify this information sufficiently has always left tempting loopholes for fraudsters, shadow directors and other shady operators to take advantage of. Any new primary legislation, which would be required to enact any recommendations, cannot come soon enough to protect businesses and their customers.
Any company that enters insolvency will be subject to a directors’ investigation to determine the circumstances surrounding the decision including what happened when and who, if anybody, was personally involved or responsible.
This applies not only to named directors and people of significant control as identified by Companies House but also to people acting in those positions even if they haven’t been formally appointed. They will be held just as liable as the officially named directors.
If you’re the director of a business and have concerns or worries about investigations into your actions or the company then get in touch with us.
We’ll take you through all aspects of the process, what the authorities will be looking for and asking and how to present yourself and your decisions in the best light possible.