Source · Select Committees · Public Accounts Committee
Recommendation 17
17
Acknowledged
Limited historic Companies House powers enabled widespread fraudulent abuse of the UK company register.
Conclusion
Until April 2024, Companies House had limited powers to check the validity of information provided to it by registered companies. It also had limited enforcement and intelligence–gathering powers, and limited scope to share data with other public bodies. The lack of checks meant it was easy for fraudsters to set up legitimate UK companies for illegitimate means.48 Written evidence we received from RAVAS said that flaws in the verification systems operated by Companies House and HMRC have enabled bad actors to obtain UK company registrations and VAT numbers which can be used to pursue fraudulent behaviour.49 In its Strategic Intelligence Assessment, published October 2024, Companies House state that the number of company incorporations in the UK in 2021 and 2022 exceeded those around the world, with 758,751 UK incorporations in 2021 being 154% higher than the nearest country (Australia). Companies House’s data shows that UK incorporations in 2021 were 441% higher than in France, and 863% higher than in Germany in the same year. Companies House also say that the scale of abuse of the UK company register continues to grow.50
Government Response Summary
The government accepts the case for exploring options to improve the authenticity and integrity of company address information on the register and DBT and Companies House will report to the Committee on progress in November 2025.
Government Response
Acknowledged
HM Government
Acknowledged
4.1 The government agrees with the Committee’s recommendation. Target implementation date: November 2025 4.2 The government accepts the case for exploring options to improve the authenticity and integrity of company address information on the register. 4.3 Already, since 4 March 2024, when the first phase of powers under the Economic Crime and Corporate Transparency Act 2023 (ECCTA) was introduced, Companies House has prioritised tackling companies with inappropriate addresses. Over 73,400 addresses have been removed and, as a result, strike off has been initiated for up to 5,000 companies per week. Through increased capabilities in data analysis, Companies House continues to work to prevent the registration of misleading information at source. For example, 7,000 new incorporations have been rejected including where evidence has suggested addresses are inappropriate. 4.4 The Department for Business and Trade (DBT) and Companies House will continue to work together in rolling out the remaining ECCTA reforms, which will help to tackle economic crime and fraud. This will include the upcoming introduction of identity verification requirements. 4.5 The potential benefit of additional legislative measures will remain under review as ECCTA reforms become embedded and their impact is evaluated. Any further changes would need to be balanced against a range of factors including burdens on business, administrative impacts and other legislative priorities. DBT and Companies House are already considering options and will report to the Committee on progress in November 2025.