Source · Select Committees · Public Accounts Committee
Recommendation 20
20
Accepted
The Companies House annual report and accounts continues to show an increase in the number...
Conclusion
The Companies House annual report and accounts continues to show an increase in the number of the companies registered. The Department considers this to be a reflection of wider international trends and increased entrepreneurial activity.41 However, the rise in registrations also increases the likelihood that the Companies House register contains fake entries.42 The Department acknowledges Companies House needs to manage this and is introducing greater powers through the Economic Crime and Corporate Transparency Bill for Companies House to check the identity of directors and to crack down on any abuse of the register.43
Government Response Summary
The government disagrees with the committee's framing of the issue, particularly regarding 'fake entries,' but confirms and elaborates on its ongoing reforms through the Economic Crime and Corporate Transparency Bill. These reforms will strengthen Companies House's powers to improve transparency, check identities, and combat economic crime by enhancing investigation and enforcement.
Government Response
Accepted
HM Government
Accepted
6.1 The government disagrees with the Committee’s recommendation. 6.2 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. 6.3 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. 6.4 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. 6.5 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. 6.6 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. 6.7 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.