Source · Select Committees · Public Accounts Committee
Recommendation 3
3
Accepted
Develop a joint plan for HMRC, Companies House, Insolvency Service to tackle corporate fraud.
Conclusion
HMRC, Companies House and the Insolvency Service have failed to work collaboratively, missing opportunities to increase the tax take. Due to the fraudulent use of UK company registrations, contrived insolvencies and phoenixism to evade tax, HMRC, Companies House and the Insolvency Service must work closely to tackle these threats together. The introduction of ECCTA presents opportunities for all three organisations to work more closely. At Autumn Budget 2024 the government announced it would increase collaboration between HMRC, Companies House and the Insolvency Service to tackle phoenixism. The organisations say they will be developing a joint plan for closer working over the next financial year. Companies House and HMRC are discussing closer integration of systems to tighten registration requirements, including a joint registration service, but they estimate this will take between five to ten years to implement. This is too long whilst major gaps remain in checks for both company and VAT registrations. Whilst it is encouraging that all three organisations are 4 committed to joint working and agree there are significant benefits to be had, we are disappointed that it is taking so long for this to happen. Delays in implementation decrease the additional revenue available. recommendation HMRC, Companies House and the Insolvency Service should develop a plan for more effective joint working and write to the Committee within six months with further details. This should include: a. clear roles and responsibilities for tackling fraudulent registrations, corporate abuse and contrived insolvencies; b. clear objectives on tackling these threats; c. an assessment of how local and shared controls can be strengthened between them and operated most cost–effectively; and d. a more ambitious timeframe for introducing a joint registration process, given there is significant benefit to this.
Government Response Summary
The government agrees and states that HMRC, Companies House, and the Insolvency Service have developed a joint programme for closer cooperation, including implementing consistent identity verification, fully tagged financial accounts, an enhanced data sharing framework, and changes to tackle rogue directors. A joint consultation on e-invoicing was also published in February 2025.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. progress. HMRC, Companies House and the Insolvency Service have strong relations, further strengthened by the Economic Crime and Corporate Transparency Act 2023 (ECCTA). The three departments have developed a programme of work to facilitate closer co-operation on company registrations and de-registrations, accounting and filing, as well as sharing risk intelligence and data. The Exchequer Secretary to the Treasury, provided an update on progress in a speech on 11 March 2025 - Exchequer Secretary to the Treasury: 20 years of HMRC - reflections and looking ahead - GOV.UK. This joint programme includes implementing consistent identity verification and authentication (IDV&A), access controls, permissions and risking tools across both HMRC and Companies House and longer-term transformation of the end-to-end registration process; implementation of fully tagged financial accounts in iXBRL to enable better targeting of risk by both HMRC and Companies House; an enhanced framework for sharing risk intelligence and data across HMRC, Companies House and Insolvency Service; and a package of changes to help prevent, detect and penalise rogue directors who abuse insolvency processes. vision, HMRC will explore how existing and emerging technologies could support more effortless and compliant models of taxation, where reporting and collection happen in real time through customer and third-party systems. 5.9 On 13 February 2025, a joint consultation with HMRC and DBT was published: Promoting e-invoicing across UK businesses and the public sector. The consultation will be live for 12 weeks. The evidence gathered will form the basis of future policy design and support ministerial decision-making. It includes examining a range of models, including options for real-time transaction reporting. This consultation closes on 7 May and further development of this work is contingent on this consultation.