Companies House talks tough on new powers

Registered companies are being warned to keep on top of their responsibilities ahead of new penalties being applied. 

Companies House will work with enforcement partners such as the Insolvency Service and the Department for Business, to share intelligence, refer cases and promote holistic enforcement action when appropriate. 

They have warmed businesses who fail to comply with their legal obligations, such as late filings, and false statements that they could face a financial penalty. 

More serious offences could result in civil action, director disqualification or potentially even criminal prosecution. Companies House will work to investigate and prosecute offences in partnership with the Insolvency Service and other enforcement partners. If convicted, a director could end up with a criminal record. 

The wider approach to enforcement is set out in the Companies House enforcement policy. 

In September TheBusinessDesk.com reported on some distressing cases of “corporate cuckooing” where rogue businesses used the registration to scam elderly people by using supposed legitimate companies. 

There have also been instances where individuals have set up hundreds of companies from domestic addresses on behalf of scammers and fraudsters.

As reported on TheBusinessDesk.com yesterday (5 September 2024) in a case at the High Court in Manchester (30 August 2024) two companies under the names of DT Care Ltd, registered in Droitwich, Worcestershire, and Amolin Solution Limited, registered in Sedlescombe, East Sussex, were wound up following action brought by investigators from the Insolvency Service.

Fraudsters located in India used the company name to target vulnerable pensioners by falsely claiming their computer had a security issue.

But the scam was enabled by using legitimate company names and registrations to give the veneer of respectability and to use an official company registration to access the UK banking system.

Experts have warned that new enforcement powers granted to Companies House still leave law-abiding businesses and consumers woefully unprotected from scammers and fraudsters who can open new companies with hardly any worthwhile checks.

However, Companies House insist the new regime under the Economic Crime and Corporate Transparency Act 2023 will enable Companies House to tackle economic crime. 

Director of Intelligence and Law Enforcement Liaison at Companies House, Martin Swain, said the introduction of these new penalties marks “another significant step forward” for Companies House and its “transformation”. 

“Where our guidance and support are not enough to encourage users to comply with the law or discourage misuse of our registers, we won’t hesitate to use these new powers available to us,” he said. 

“We’ll take a consistent and proportionate approach to these new powers to firmly, but fairly, enforce the law. This will improve the quality of the data on our registers and help us play greater role in identifying, disrupting and preventing economic crime.” 

 Director of Legal Services at Insolvency Service, Jonathan Lupton, said his organisation was “committed to working collaboratively” with Companies House to help improve the integrity and transparency of the data on its register.

“Where it is appropriate and proportionate to do so, and as part of our overall approach to tackling economic crime and wrongdoing, we will utilise the powers available to us to take enforcement action against misconduct on the register.”