Recommendation 9

Companies House said that, prior to the introduction of the Economic Crime and Corporate Transparency Act (ECCTA), it estimated that 5% of UK registered companies were fraudulent. It explained that external commentators had estimated the figure could be as high as 20%, and that the true value likely lies somewhere in between.19 HMRC told us that individuals getting on the company register who should not be there, or with the incorrect classification, creates a tax risk.20 In its Strategic Intelligence Assessment, published October 2024, Companies House states that UK limited companies are used in VAT fraud.21 Companies House said it did not know how fraud on the company register translates into tax losses, and HMRC said that its estimate of the tax gap does not tie back to registrations in Companies House.22 HMRC’s strategic approach