Source · Select Committees · Public Accounts Committee
Recommendation 21
21
Rejected
It has been an offence since 2009 to make a false return to Companies House,...
Conclusion
It has been an offence since 2009 to make a false return to Companies House, yet to date there is a record of just one conviction for this offence, in 2018. The Department was unable to confirm the number of prosecutions or convictions made under these existing powers.44 The Department was also unable to confirm why, despite the continued rise in the number of companies registered and the increasing likelihood that some of these registrations are being used to commit fraud against businesses and the public, the Department’s powers to enforce the existing law are not being used.45 37 HM Treasury, Managing Public Money, March 2022, page 14, section 3.3, and page 102, section A4.9.1 38 Committee of Public Accounts, Department for Business, Energy & Industrial Strategy Annual Report and Accounts 2020–21, First Report of Session 2022–23, HC 59, 11 May 2022 39 Written evidence submitted by Institute of Chartered Accountants in England and Wales - ICAEW 40 Q 134 41 Q 125 42 Q 126 43 Q 127 44 Q 129 45 Qq 130–131 Department for Business, Energy & Industrial Strategy Annual Report and Accounts 2021–22 15 3 Post Office Horizon IT programme compensation
Government Response Summary
The government disagrees with the Committee's implied criticism regarding the lack of convictions under existing powers, explaining that most errors are accidental and courts are reluctant to sanction subsequently-compliant offenders. However, it details new powers and reforms under the Economic Crime and Corporate Transparency Bill to strengthen enforcement and combat economic crime.
Government Response
Rejected
HM Government
Rejected
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.