As experienced accountants, we are accustomed to frequent changes from HM Revenue & Customs, but changes from Companies House are less common. However, there are proposed amendments to the Companies Act 2006 that will introduce identification verifications at Companies House. We are expecting more changes down the line as well so watch this space.
A draft proposal was introduced to the House of Commons last May. This has meant the Companies Act 2006 is to be amended as a result of the Economic Crime and Corporate Transparency Act (“The Act”).
The Act is set to reform the role of Companies House in order to:
- Improve transparency
- Strengthen our business environment
- Support our national security
- Diminish economic crime
The Act will introduce the biggest changes to Companies House for decades. So what does this mean for you as a business owner?
The Background
Company registration has been subject to a lot of abuse. For instance, individuals can easily register someone as a director without their knowledge or consent, or even create fictional identities to hide their true intentions.
What’s more, there has never been a check to ensure parties filing documents and forms to Companies House are genuine and represent the business. This has lead to a rise in fraudulent practices.
Identity verifications at Companies House is a major component of the reforms set out in the Economic Crime and Transparency Act 2023. This kicked off in March when Companies House was given more powers to remove fraudulent information from the register.
So now that Companies House have been granted the extra powers, they are going to use it to clean their house.
Companies House proposals and time lines
Companies House has issued a timeline for identity verification, affecting more than seven million company directors who will need to provide proof of their identity before filing information on the register to reduce abuse and fraud.
Spring 2025
As a first step, Companies House Trust and Company Service Providers (TCSPs) will be registered. This includes firms like ours, the accountants and the solicitors. We will apply for authorisation as Corporate Service Providers (ACSPs) next Spring.
We are eligible because we are registered with a UK supervisor for anti-money laundering. As you know we are registered with the Institute of Chartered Accountants in England and Wales (ICAEW).
This new authorisation will enable us to offer verification services for our clients which is good news.
Autumn 2025
The next step, by Autumn 2025, identity verification will become a mandatory requirement for company incorporation and appointing new directors and persons with significant control (PSCs).
Identification verifications will also apply to other entities such as Limited Liability Partnerships (LLP).
This approach will ensure individuals have to verify their identities during incorporation. It will promote transparency and integrity within the business framework in the UK, one of the aims of the Act.
2026
There will be a transition period of twelve months for existing companies until Autumn 2026. Companies will be required to provide identity verification credentials for their directors and PSCs when their confirmation statement is due within this period.
We may therefore ask you more questions when we are next filing something on your behalf.
Companies House have increased their fees recently and may do so again as this enhancement has involved significant investment in their infrastructure.
There are other operational changes that Companies House are planning to introduce over the coming years.
To ensure businesses comply with the changes, there will be penalties for ignoring the rules.
Do I need an accountant or solicitor to verify myself at Companies House?
You don’t need to necessarily enlist the services of a professional to verify yourself at Companies House. You can verify directly at Companies House.
You can use your .Gov One Login to verify your identity. You will need your legal documents such as your passport.
If you want to form your own company, you can still do so. However there will now be an additional step to verify yourself.
What do you need to do next
If you are our client you don’t need to take any action. Once we have been registered next Spring, we will be in touch with you if we need any further information.
If you are dealing with Companies House directly including filing accounts etc, you may want to appoint accountants to make your job easier. Have a look at how we work.