Source · Select Committees · Public Accounts Committee
Recommendation 6
6
Rejected
Publish convictions for false declarations to Companies House and actions to identify and prosecute offenders.
Recommendation
Confidence in the Companies Register is undermined by errors and inaccuracies. Companies House, an executive agency of the Department, maintains the Register of Companies for England and Wales. The size of the register is growing, which the Department considers reflects international trends and entrepreneurial activity. However, false statements, fake entries, errors and inaccuracies (such as fictional company directors, or individuals named without their consent) can be used to commit crime, including fraud. Making a false declaration to Companies House has been a criminal offence since 2009 under the Companies Act 2006, but this legislation is rarely enforced. There is a record of just one conviction for this offence, in 2018. The Department considers forthcoming legislation following the Economic Crime and Corporate Transparency Bill will provide powers to Companies House to identity-check directors and refuse to register companies. Recommendation 6: The Department, alongside its Treasury Minute response, should set out the total number of convictions for making a false declaration to Companies House, and the actions which are being taken to ensure offenders are identified and prosecuted.
Government Response Summary
The government disagrees with the recommendation, stating that most errors are accidental and corrected before prosecution, and courts are reluctant to sanction compliant parties. It highlights the forthcoming Economic Crime and Corporate Transparency Bill which will reform Companies House's powers, but does not commit to setting out conviction numbers or current prosecution actions.
Government Response
Rejected
HM Government
Rejected
The government disagrees with the Committee’s recommendation. Most errors on the Companies Register are accidental rather than deliberate and are corrected before enforcement action reaches the prosecution stage. Historically courts have been reluctant to sanction offences where the person or company has subsequently complied. Therefore, numbers of prosecutions are not an indicator of the extensive compliance activity undertaken by Companies House. Once passed, the Economic Crime and Corporate Transparency Bill currently before Parliament will reform the role of Companies House and improve transparency over UK companies, to strengthen our business environment, support our national security and combat economic crime, whilst delivering a more reliable companies register to underpin business activity. The reforms will bear down on the misuse of UK companies and other corporate structures as vehicles for economic crime and constitute the most significant reform to the UK’s framework for registering companies in some 170 years. The reforms include extending the Registrar’s powers so that the Registrar becomes a more active gatekeeper over company creation and custodian of more reliable data concerning companies and partnerships – including new powers to check, remove or decline information submitted to, or already on, the companies register. The reforms also provide Companies House with more effective investigation and enforcement powers and facilitates better cross-checking of data with other public and private sector bodies. Companies House already publishes an annual report on its activities and the Bill includes an additional reporting requirement on the implementation and use of the new powers in the Bill.