UK: Companies House regime faces major overhaul to tackle tax evasion.

As published on internationalinvestment.net, Thursday 9th May, 2019.


The UK is planning the biggest overhaul of its official corporate register in 170 years to crack down on abuse of the system for money laundering and tax evasion.

The aim of the wide-ranging proposals, set out in detail in an 80-page consultation document, is to limit the risk of fraud and misuse of information, by widening the information companies are required to disclose, increasing the checks on this information,  and introducing measures to improve the exchange of intelligence between Companies House, HMRC and UK law enforcement bodies.

Companies House already maintains a public register of beneficial ownership, as well as basic information about companies and their officers. The basic companies register records over four million limited companies, and was accessed 6.5 billion times in 2018.

Knowing that a company’s information is accurate and transparent is a fundamental part of a leading business environment – giving entrepreneurs and businesses the confidence they need to do business in the UK"

Under the new proposals, officials at Companies House will have more powers to verify details on directors by cross-checking with other government agencies.

Limits are also set to be imposed on the number of directorships an individual can hold, while the consultation will also consider identity verification for larger shareholders.

In the last three years there have been almost 10,000 complaints to Companies House from people concerned about their personal details, with worries including fraud and use of personal details topping the list.

Nearly 3,000 companies list their beneficial owner on Companies House as a company based in a tax haven, even though this is against the rules, according to research from Global Witness, the anti-corruption group. It also spotted over 2,000 persons of significant control behind companies on the registry who were disqualified directors.

Even more worryingly, 76 beneficial owners in the registry share their name and date of birth with individuals on the US sanctions list.

Knowing who is setting up, managing and controlling companies: Those who have a key role in companies will have their identity verified

Improving the accuracy and usability of data on the register: Companies House will now be able to query and corroborate information before it is entered on the register. This will also mean it is easier and quicker to remove inaccurate information from the register

Protecting personal information on the register: In a minority of cases the register can be misused to identify personal information, which can then be used for criminal purposes. Under these proposals Directors will be given additional rights over their information, for example personal home addresses, while ensuring this information is still available in a transparent manner to public authorities where appropriate.

Improving the detection of possible criminal behaviour: Better information sharing by Companies House, other Government bodies and financial institutions will better protect businesses and ensure faster and more sophisticated identification of possible criminal activity - benefiting businesses and consumers.

 Business minister Kelly Tolhurst has said companies will be better protected from fraud under the new measures which have a "clear aim" of minimising the burden on law abiding firms.

"The UK already has some of the strongest protections in the world against money laundering," she added.

"We are ranked as one of the top countries worldwide for cracking down on economic crime - protecting businesses and consumers.

"The reforms announced today will support the fight against the use of dirty money in the UK and enhance the protections for entrepreneurs and directors from criminal activity.

"Knowing that a company's information is accurate and transparent is a fundamental part of a leading business environment - giving entrepreneurs and businesses the confidence they need to do business in the UK."

Chief executive of Companies House Louise Smyth said: "The register already plays a vital role in contributing to the UK's economy through the investment decisions which rely on our data.

"This package of reforms represent a significant milestone for Companies House as they will enable us to play a greater part in tackling economic crime, protect Directors from identity theft and fraud and improve the accuracy of the register.

"The UK has one of the highest ratings for cracking down on anonymous companies, and the government's proposed measures build on the Britain's world-leading anti-corruption activity.

"In 2016, the UK became the first country in the G20 to introduce a public register of company ownership, while new protections against identity fraud for company directors were introduced in 2018."

ASIA: Chinese family office is…