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Have your say on proposals to further safeguard businesses from fraud.

Companies House Improving the accuracy and usability of data on the register consultation contains a number of reforms including some that you, and ACCA on your behalf, have been highlighting to Companies House.

Companies House states that the proposed reforms will allow it to ‘query and corroborate information before it is entered on the register’ and that it will be ‘easier and quicker to remove inaccurate information from the register.’

In the document, it is acknowledged that “while the number of reports of inaccurate data from third parties remains extremely low, under this extensive scrutiny Companies House is increasingly being alerted to issues on the register. These include:

  • companies filing inaccurate information e.g. audit reports
  • companies set up to trade on the good name of others
  • companies using addresses they are not entitled to use for their registered office
  • companies appointing individuals that have no association with the company’.

It is highlighted that the current powers available result in unnecessary cost and time for complainants and Companies House. The consultation states that ‘it can be difficult to legally remove information from the register even when it is highly suspect.

An increasing number of complaints are being made from third parties about inaccurate information which has been filed on the register by a company (for example, that a company has falsely claimed that their annual accounts had been audited by well-known audit firms and that individuals had been fraudulently appointed), and it is not always possible for Companies House to take effective action.

Section 1095 provides the company in question with the right to object to an application to remove information from its record, and that objection does not have to be evidenced. In such cases, third parties would need to apply to a court to ensure the information is removed, with the attendant cost and inconvenience.’

The proposed change is ‘that where an application to remove information is made by a third party in respect of information filed by a company, that company should have to provide some rationale and evidence to support any objection.’

It is stated that ‘Companies House would also have the power to ask for further evidence, where appropriate. Examples of where this might happen include:

  • where a company files information that represents a significant change from its previous status, such as a significant increase in share capital, this may be queried;
  • where a company claims an exemption from filing full accounts, Companies House might request proof that the company is entitled to the exemption; and
  • where a company uses a registered address, Companies House might seek confirmation of the right to use that address.’

What are the other powers?

The aim of granting increased powers are as a part of:

  • major upgrade of Companies House register aimed at tackling misuse and ensuring its accuracy.
  • reforms, business owners will benefit from new protections from fraud.
  • A new package of measures will boost the reputation of the UK’s business environment and ensure the reliability of the UK’s company register.

The proposals will be underpinned by a major transformation programme to upgrade digital services at Companies House alongside a complete review of its staffing and skills requirement. This package of proposals, if brought forward would be the largest change to our system of setting up and operating companies since the register was created in 1844.

The proposals in full

The package of proposed reforms includes:

  • 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 – benefitting businesses and consumers.

The consultation is open until 5 August and covers a number of reforms.

Article from ACCA In Practice