ID verification, a key component of the wider Companies House reforms, is scheduled for implementation in 2025. These reforms, part of the Economic Crime and Corporate Transparency Act (2023), aim to enhance transparency and disrupt economic crime, benefiting businesses across the UK, including those in St Albans and Watford.
This is designed to give the agency the ability to play a more significant role in “disrupting economic crime and supporting economic growth”. It is hoped that the new powers will ultimately lead to “improved transparency and more accurate and trusted information”.
As a trusted local accountant in St Albans, Visionary Accountants is closely monitoring these developments to ensure our local clients are fully prepared for the upcoming changes.
Large and complex
The measures introduced have been described as a “large and complex set” that will come forwards in phases over the years ahead, with their operation being funded by a rise in Companies House fees on a cost-recovery basis.
In the latest update, the agency has confirmed that by the spring of 2025, it will introduce the first step of the proposed ID verification plan by allowing trust and company service providers (TCSPs) accountants and other professional service providers – who are registered for anti-money laundering (AML) with a supervisor in the UK – to register to become authorised corporate service providers (ACSPs).
“This will allow them to carry out verification services for their clients and provide these details to the registrars,” it said.
Full details of the changes and the Companies House roadmap can be found here - Changes to UK Company Law.
Verify at the point of incorporation
“By autumn 2025 we will commence the new identity verification requirements where all directors and persons with significant control (PSCs) for new incorporations will be required to verify their identity at the point of incorporation.
“There will be a transition period of 12 months for existing companies who will be required to provide identity verification credentials for their directors and PSCs when their confirmation statement is due.”
A timetable of the wider changes suggests that by the end of 2026, Companies House should be able to complete the transition period for all individuals on the register requiring identity verification and start compliance activity against those who have failed to verify.
Registrars’ objectives
There are 3 registrars of companies in the UK:
- The Registrar of Companies for England and Wales is based at Companies House, Cardiff, and is responsible for the registration of companies in England and Wales
- The Registrar of Companies for Scotland is based at Companies House, Edinburgh, and is responsible for the registration of companies in Scotland
- The Registrar of Companies for Northern Ireland is based at Companies House, Belfast, and is responsible for the registration of companies in Northern Ireland
The legislative changes are underpinned by a new set of objectives for the registrars. They provide a framework for how we operate as an organisation, from guiding our decision making to exercising our new powers.
Objective 1 – To ensure that any person who is required to deliver a document to the registrar does so (and that the requirements for proper delivery are complied with).
Objective 2 – To ensure that information contained in the register is accurate and that the register contains everything it ought to contain. This reference to ‘the register’ includes any records kept by the registrar under any enactment.
Objective 3 – To ensure that records kept by the registrar do not create a false or misleading impression to members of the public.
Objective 4 – To prevent companies and others from:
- carrying out unlawful activities, or
- facilitating the carrying out by others of unlawful activities
There’ll be new responsibilities for:
- all new and existing company directors
- people with significant control of a company (PSCs)
- anyone who files information on behalf of a company
Implementation
From 4 March 2024
Companies House has been able to improve the quality of information on the register by:
- querying and rejecting new information received in customer filings which we suspect to be wrong or fraudulent
- removing more inaccurate information from the register, including removing names and addresses of citizens which have been used without consent – the processes for removing information are being streamlined and more information can be removed administratively, without people needing a court order
- querying and rejecting company names which have been chosen to mislead customers, facilitate fraud, or give the false impression that the company is connected to a foreign government
- improving the accuracy and reliability of registered office addresses by introducing a new definition for an appropriate address (companies are not able to use a Royal Mail PO Box and equivalent services offered by other parties) – we will be able to commence strike off measures against companies if they do not provide an appropriate address within a specified period
Companies House has been able to improve investigation, enforcement and data sharing by:
- sharing more information with law enforcement agencies and regulatory bodies to help tackle money laundering, fraud and other criminality
- undertaking greater analysis of information held, including comparison against other data sets obtained externally
Companies House has been able to better prevent disqualified directors from acting by:
- rejecting documents notifying appointment of a new director to an existing company where the individual is a disqualified director
Companies House has also been able to require companies to:
- provide a registered email address to allow Companies House to contact companies about matters relating to their filing quickly and efficiently (this email address will not be shared on the public register)
- confirm that the future activities of the company are lawful at the point of incorporation, and to confirm this every year on the confirmation statement
From 1 May 2024
Companies House has been able to:
- charge higher incorporation and annual fees to fund investigation and enforcement activities against those misusing the register
By Autumn 2024
Companies House should be able to:
- issue financial penalties for any relevant offences under the new Act and the Companies Act
By Winter 2024 into 2025
Companies House should be able to:
- expedite the striking off of companies where the registrar has concluded the company has been formed for a false basis
By Spring 2025
Companies House should be able to:
- carry out checks on Authorised Corporate Service Providers (ACSPs) to authorise them to carry out verification services – ACSPs will be required to be registered in the UK and be subject to the UK’s anti-money laundering regime
- allow individuals to voluntarily verify their identity
- receive and assess applications from individuals seeking to have residential addresses suppressed from public disclosure in certain circumstances
By Summer 2025
Companies House should be able to:
- allow access on request to certain trust information on the Register of Overseas Entities
By Autumn 2025
Companies House should be able to:
- make identity verification a compulsory part of incorporation and new appointments for new directors and PSCs
- begin the 12-month transition phase to require more than 7 million existing directors and PSCs to verify their identity – the identity verification will happen as part of the annual confirmation statement filing
By Spring 2026
Companies House should be able to:
- make identity verification of the presenters a compulsory part of filing any document
- require third party agents filing on behalf of companies to be registered as an ACSP
- reject documents delivered by disqualified directors as they will be prohibited from doing so, unless they are delivered by an ACSP for specified filings permitted by law
By the end of 2026
Companies House should be able to:
- require all limited partnerships to submit more information, providing greater transparency for users of the register
- complete the transition period for all individuals on the register requiring identity verification, and start compliance activity against those who have failed to verify their identity
- facilitate greater cross-checking of information and data between Companies House and other public and private sector bodies
Following accounts reform
Companies House should be able to:
- mandate software-only filing for all accounts – package accounts will be able to use the new zip package functionality
- remove the option for small companies and micro-businesses to file abridged accounts
- require all companies to file profit and loss accounts, helping to improve the financial information on the register – and require small companies to also file their directors’ report
- require a company claiming an audit exemption to provide an enhanced statement from their directors on the balance sheet, specifying the exemption being claimed and confirming the company is eligible for it
- limit the number of times that a company can shorten its accounting reference period
Following the implementation of restrictions on corporate directors
Any corporate directors of companies will be restricted so that any corporate director of a company must have an all-natural person board.
All the directors of the corporate director will be required to verify their identity in order for the corporate director to be registered.
Only UK corporate entities with legal personality will be capable of acting as a corporate director. We will prohibit the use of overseas companies from acting as corporate directors in the UK.
Painfully slow introduction
Some accountants and advisers are asking why the painfully slow introduction which could be regarded as literally giving fraudsters and dodgy directors a years’ notice before anything will happen to them?
There are many established apps and software solutions already out there for verifying identities. Many of which are already in use by law and accounting firms for AML/KYC checks. Why does Companies House need until late 2025, maybe 2026, before they can start checking directors?
Some critics have argued that “changes should be implemented now using existing technology – no need for Companies House to reinvent the wheel and produce something that will no doubt wobble continuously.”
What does it mean for our Clients?
If your business is using an unregulated 'accountant' that is not a member of a professional body and registered for anti-money laundering oversight then they will have a problem acting on your behalf.
Visionary Accountants will be registered as an Approved Corporate Services Provider when the new service opens in April 2025. Our clients can be assured that, as a regulated Practice and AML supervised body, we will be able to handle these changes on behalf of our clients and keep them fully informed.
Why Choose Visionary Accountants?
With years of experience serving St Albans, Watford, and the wider Hertfordshire area, Visionary Accountants understands the unique needs of local businesses. As these reforms roll out, we’re committed to keeping our clients informed and supported every step of the way.
Whether you’re seeking an accountant in Watford to manage your company filings or need advice on AML compliance in St Albans, our team of local accountants is here to help.