Companies House fraud changes incoming to limited companies

Companies House has tabled anti-fraud reforms affecting PSC owners, in what ministers are hailing as the biggest changes to the system of setting up and running a company since 1844.

In a new 80-page consultation, business officials say they particularly want to hear from limited company directors about the proposed changes to the 175-year-old register.

They include capping how many concurrent directorships a person can hold; restricting the number of accounting year-end movements, and new verification of data/identities submitted.

As well as the latter -- in effect, a new ability to query PSCs’ entries, Companies House must also get the power to strike-off limited partnerships, says the consultation, open until August.

'For criminal purposes'

Other changes will hopefully protect people rightfully on the register -- such as by removing their ‘occupation’ as a requirement, to help head off potential misuse “for criminal purposes.”

But the ContractorUK reader recently worried that a violent spouse will locate them because their displayed, registered address is also their home, is not helped under the reforms.

This is despite the government admitting it has received “complaints” about CH’s inability to ‘suppress information where the person concerned is at risk of violence or intimidation.’

'Suppression'

In fact, the proposal (asked at Q30) excludes ‘suppression’ where the address is a live company’s registered office, or was the registered office when the company was dissolved.

Suppression is going to be looked at, however, both for company directors’ signatures (amid fears showing them facilities fraud), and the ‘day’ entry for DOBs filed before October 2015.

Yet other proposals in the consultation sound like they could actually add to directors’ workloads, or increase their administrative burden when dealing with Companies House.

'Need to show consent'

For example, officials plan to ask for evidence from companies to prove that they are entitled to use an address as their registered office, especially when a company changes its location.

“The evidence could take various forms, such as evidence of a tenancy agreement, but it would need to show that consent had been given by the proprietor of the address for the company to use it,” CH proposes.

Similarly arduous-sounding, users of the CH register will have to support their submissions where they represent “significant changes”, such as a big increase in share capital.

'Suspicious activities'

Register officials might also ask limited company directors to find and send them proof where the company says it is entitled to an exemption from filing full accounts.

Yet contractors in IT will likely welcome CH becoming more evaluating of the data it receives, due to the technology required to underpin the new, questioning approach.

“Discretion to query and check information…will be assisted by Companies House further developing functionality in its systems to identify suspicious activities on the register.

“In addition to using Companies House’s own knowledge of the register, this functionality will be built up by utilising…[a] ‘risk engine’ [that] will incorporate machine-learning and use new analysis techniques”.

'Contractors providing core services'

And it’s clear contractors will be needed for that work, as the consultation says a relaxation of rules on addresses will be needed where CH’s “third parties” build the new core services.

“There could be instances where it would be necessary to disclose residential addresses – for example, to contractors engaged in providing core services on its behalf or make more use of cloud-based services,” Companies House says.

The government body elaborated: “[We] will go through a major transformation in the coming years.

'Touch every aspect'

“Transformation will touch every aspect of Companies House’s work, covering both customer-facing and internal digital systems. The programme will entirely redesign its digital services and align its culture with new ways of working and new roles.”

Writing in the document’s foreword, small business minister Kelly Tolhurst MP confirmed the sheer size of the undertaking: “The potential reforms set out in this consultation would amount to the biggest changes to the UK system for setting up and operating companies since the UK company register was created in 1844.”

To respond to the consultation, which contains more than 40 questions for limited company directors, shareholders and other affected parties to potentially answer, email: [email protected] with the ref. ‘Corporate transparency and register reform.’