Companies House given powers to tackle fraud
Companies House has begun a phased rollout of new powers to improve the quality and reliability of its data and clamp down on abuse of the companies register
The register is used 14 billion times a year and the new rules are designed to ‘improve the quality and reliability of the register. Cleaning up the register will not happen overnight but it will enable us to improve transparency,’ Companies House said. ‘We will use data matching to check the company details and we will do more and more as time passes.’
Most of the changes require significant IT investment and will take place over a number of years with a need to hire more specialist investigators. Companies House has already heavily invested in data science capabilities so they can be ‘ahead of the curve in terms of our future capabilities. We recognise that technology is changing all the time and we have to keep pace with that’.
The organisation has grown quite dramatically in the last year with the recruitment of over 160 people, and plans to take on another 60 over the next few months to deal with the rollout of identity verification using the new Gov.uk One Login, which is replacing Government Gateway accounts.
Down the track, Companies House will introduce compulsory identity verification in 2025, as well as streamlining accounts filing requirements for small companies to require all companies to provide profit and loss accounts, a director’s report where accounts are not audited, and no more abridged accounts from 2026.
A timetable for these changes has not been announced but they are expected to come in over the next two to three years. The measures will require secondary legislation through a number of statutory instruments.
‘This large and complex set of changes will be introduced in phases over the coming years,’ Companies House said.
The first measures under the Economic Crime and Corporate Transparency Act 2023 (ECCT Act) came into force on 4 March.
Companies House currently has quite limited powers to question information – under the new rules, it will be able to take a much more robust approach, and will be able to query information already on the register. This will see officials at the registry challenging any inconsistences from new and existing entries on the register, for example, if a company has unusually high share capital, or directors registered at other addresses, then this will be investigated.
The most significant changes include greater powers to query information and request supporting evidence, more robust checks on company names and the ability to remove factually inaccurate information.
In future, companies will not be able to use a PO Box as their registered office address and must have an appropriate address at all times.
Companies House has written to a few thousand companies telling them to change their addresses as they are currently using PO Box numbers.
All companies will also have to supply a registered email address although this will not be published.
There will also be a requirement for subscribers to confirm they are forming a company for a lawful purpose when they incorporate, and for a company to confirm its intended future activities will be lawful on its confirmation statement.
In terms of powers to target criminal abuse of the register, Companies House will also be able to share information more proactively with other government departments, including HMRC, and law enforcement agencies.
Some of the fees for sharing the information with law enforcement have been removed and Companies House is already sharing trust data from the register of overseas entities with other departments, which is proving to be a ‘really rich resource of data especially for HMRC’.
This means that Companies House will be able to ‘share data to help disrupt economic crime. We will be much more proactive and will help UK’s drive to tackle economic crime. We have received funding to increase capabilities in this area and have hired more investigators’.
The new powers to investigate entries are similar to powers for monitoring the Register of Overseas Entities.
There will also be new criminal offences and civil penalties for failure to comply with the rules.
Companies House CEO Louise Smyth said: ‘These new and enhanced powers are the most significant change for Companies House in our 180-year history.
‘We’ve known for some time that criminals have misused UK companies to commit fraud, money laundering and other forms of economic crime.
‘As we start to crack down on abuse of the register, we are prioritising cases where people’s names and addresses have been used without their consent. It will now be much quicker and easier to report and remove personal information that has been misused. This will make a real difference to individuals.’
From 1 May 2024, Companies House will also increase fees to take new future expenditure into account, as well as making sure costs are recovered from existing expenditure.
This is the first phase of measures to improve corporate transparency, with further legislation required to enforce new reporting rules for smaller businesses with the introduction of mandatory profit and loss accounts, and end of abridged accounts, , and the new failure to prevent fraud offence.
Vincent Billings, partner in the corporate and commercial team at SA Law, said: ‘The aim is to create better transparency and remove the presence of so-called ‘Mickey Mouse’ companies. But this is a source of anxiety for many company directors, who are worried about being caught in a position where they have failed to comply with the new laws.
‘There are other major changes to be expected later down the line – including a new ‘failure to prevent fraud’ offence, which means directors could be held liable for failing to prevent fraud committed by a member of staff, or a business or individual they’re associated with.
‘With consequences including financial penalties and potentially even prison sentences, it is vital directors are up to speed with the changes and seek appropriate advice if they’re unsure about anything.’
The new rules are meant to crack down on kleptocrats, criminals and terrorists who abuse the current open economy.
Business minister Kevin Hollinrake said: ‘Companies House now has the tools to take a much harder line on criminals who take advantage of the UK’s open economy and can now ensure the reputation of our businesses is not tarnished by the UK playing host to the world’s scammers.
‘The new reforms provide further protection to the public from companies fraudulently using their address and will begin to remove the smoke and mirrors around companies hiding behind false information.’
- Published in Fraud
HMRC to replace Government Gateway accounts with One Login
The government is investing £305m in a single login system for taxpayers and agents using online services such as HMRC with the launch of GOV.UK One Login
The new login service has two factor authentication and will be rolled out across all government web services to replace Government Gateway accounts over the next three years.
The project is being led by the Cabinet Office with HMRC one of the first government departments planning to roll out the service.
In future, users will only need a single login to access all central government services, rather than remembering multiple accounts and passwords. Gradually, over time, One Login will replace all existing login and identity checking platforms across central government. Government Gateway is over 20 years old and was first introduced in January 2001.
The Cabinet Office said: ‘The GOV.UK One Login programme as a whole has a cost of £305m, which includes development, implementation, running the system and support for users and services. This is over a three-year period and will see up to 145 services from across government join by March 2025’.
In a bid to prevent fraud, One Login includes two factor authentication, which requires users to set up their account with a code used in addition to the password, for secure logging in.
When a user proves their identity using GOV.UK One Login, there will be sophisticated counter-fraud measures in place to ensure they are who they say they are.
GOV.UK One Login will improve digital inclusion by offering multiple ways for people to prove their identity – including those without photo documentation (like a passport or driving licence) – and access government services online, the Cabinet Office confirmed.
As the rollout is expected to be completed within a year, there will be pressure to transfer millions of Government Gateway individual users to the system.
In a statement, HMRC said: ‘From Spring 2024, HMRC will begin to invite individual customers without existing HMRC online sign-in details to create a GOV.UK One Login account. There will then be a gradual migration of existing Government Gateway customers starting with very small and controlled numbers.
‘HMRC is still in the private testing stage, so precise dates are yet to be confirmed.
‘Initially, only a small number of users will be able to access HMRC services through GOV.UK One Login, with volumes building gradually over time. There will be no sudden switch-off of the Government Gateway service.
‘This measured approach is designed to ensure a high-quality experience for users.’
It is important to note that HMRC will contact individual taxpayers to advise them to migrate.
HMRC stressed: ‘Existing Government Gateway users will be informed when they need to create a GOV.UK One Login account to replace their Government Gateway – they don’t need to contact HMRC.’
‘It will not happen for everyone at the same time, and you do not need to do anything unless we ask you to.
‘You do not need to do anything differently to access HMRC online services, until we prompt you to.’
The scheme is projected to deliver at least £700m of benefits by April 2026, the Cabinet Office said.
This spring, users new to HMRC will have to set up a new GOV.UK One Login. Later in the year, all users returning to HMRC services will be directed to use One Login, rather than Government Gateway.
Agents will continue to use Government Gateway to access their services for the time being and HMRC has not yet finalised details of how the agent rollout will work and the timetable.
Once the system is fully operational, the full range of HMRC and wider government services will be available online through the single login, including income tax, student loans, and Universal Credit, which are currently available through Government Gateway.
At the moment, there is simply a list of links to other pages on gov.uk sites, including find a grant, apprenticeship assessment service and basic DBS checks.
HMRC has issued initial guidance on the new login, stating that ‘GOV.UK One Login is a new way of signing in to government services. It provides a simple way for you to sign in and prove your identity using an email address and password’.
Over time it will replace all other sign in routes including Government Gateway that many customers and businesses currently use.
Going forward, anyone accessing government services online, including HMRC, will automatically be asked to create a GOV.UK One Login.
The One Login service will have to be used by accountants and tax agents although full details of how these accounts will interact with client accounts has not been published.
HMRC confirmed: ‘If you’re a tax agent, or an organisation with a business tax account, you will continue to use Government Gateway until you’re asked to create a GOV.UK One Login.’
There is a new authorisation and identity verification process to sign up to the One Login, which means you will need to have some identification documents such as a passport or driving licence to complete the application.
Users will have to input an email address and include the preferred method to get security codes, either via a mobile number or an authenticator app.
Once you start the registration process, HMRC first checks your email address by sending a six-digit security code to verify the email.
Once an account is created, the system will send security codes to verify identity via text message or authenticator app for mobiles, tablets or computers. Then users can access their account via https://www.gov.uk/account
- Published in HMRC