PROOF scheme – extra protection for limited company owners

The PROOF scheme, aka the Protected Online Filing scheme, is a free service provided by Companies House to help protect limited companies from potential fraud.

Although small contractor companies may seem unlikely targets for potential fraud, the extra security provided by the scheme will be of interest to some business owners. Especially with cases of fraud on the rise.

And the contracting industry itself isn’t immune; last year fraudsters set up a series of companies with ‘similar’ names to those of existing umbrella payroll providers with apparent ease.

What is the PROOF scheme?

The PROOF scheme adds an extra layer of protection against potential fraud and/or identity theft.

It was set up by Companies House (the registrar of all companies in the UK) as part of its strategy to increase protection for businesses and reduce corporate fraud.

The scheme involves moving away from traditional paper forms to online filing for key company documents

Once registered with the scheme, Companies House will stop accepting any physical paper forms related to a specific company. This includes core documents such as appointment changes, company name changes and changes to the registered office.

Instead, companies who join the scheme must file these documents digitally, which is clearly more secure and lowers the risk of fraud by removing the vulnerabilities associated with paper filing.

Currently, Companies House operates on a good faith basis when accepting paper forms and documents.

There are limited identity checks on physical documents, which means criminals can potentially fraudulently change a company’s information using forged signatures and letterheads.

This lack of verification poses a real threat, as key details can potentially be changed without the company’s knowledge or consent.

How does the PROOF scheme work?

The essence of the PROOF scheme is to ensure all company documents are filed digitally, in other words, any changes are made securely by authorised personnel (usually company directors) using verified credentials.

The documents that must be filed online under the PROOF scheme include:

• Changes to the registered office address.
• Appointments, resignations, or changes to directors, secretaries and their personal details.
• Changes to the company name by extraordinary resolution.

Making sure the registrar has accurate and up-to-date company information is vital. Banks, suppliers and other organisations routinely conduct Companies House searches for risk and due diligence purposes.

If details are inaccurate, it can have major consequences such as withdrawal of banking facilities or commercial credit.

Unfortunately, under paper filing criminals can hijack companies by submitting forged documents to change registered addresses and directorships. This then facilitates corporate identity theft, where they obtain credit and conduct other crimes under the company’s name. Companies House receives around 50-100 reported cases of such identity theft issues every month.

The risks of paper filing were emphasised in a recent case, where two directors had their identities stolen when criminals changed the registered address and directors at Companies House. They obtained credit cards and loans in the names of the genuine directors, causing extensive losses.

How your limited company can join the PROOF scheme

Joining the scheme is straightforward for any company. Before you start, the only requirement is that your company is already registered for Companies House online filing services.

If you’re not already registered, you need to set up a secure online account on the Companies House website here.

Once registered for online filing, a company can join PROOF directly through their account. The process is simple:

1. Log into the online filing portal and click the ‘Join PROOF’ link at the top of the page.
2. Read and agree to the PROOF scheme terms and conditions.
3. Select the option to protect the company.

Companies House will send an email confirming the application has been approved. The company can then file the mandated document types through the PROOF digital services.

It is important to make sure all relevant personnel are set up to use the online accounts after joining PROOF. Company directors and secretaries will require authentication codes to file documents digitally, as physical copies will be rejected by Companies House.

Discuss your plans with your accountant if they usually deal with Companies House matters on your behalf. They may also have the authentification codes you require to join the scheme.

Benefits of using the PROOF scheme

There are several clear benefits for companies registering for the PROOF scheme:

Increased protection

The key advantage is enhanced protection against fraudulent changes to a company’s registered details. By only accepting online documentation, PROOF eliminates the vulnerabilities of paper filing. This provides security against growing risks like corporate identity theft.

Simpler filing

Registering for PROOF streamlines company compliance, as documents can be completed and filed online without paperwork. This is more convenient than printing, posting and waiting for physical forms.

Enhanced verification

PROOF enables Companies House to utilise increased ID checks, fraud screening and digital verification when changes are filed. This improves accuracy compared to paper forms.

Data transparency

Searchers can access a company’s full filing history online with details of who submitted changes. This increases traceability and transparency.

Mandatory requirement

All companies are required to use PROOF for filing certain documents like address changes. Joining PROOF ensures you can easily comply with this obligation.

While PROOF was voluntary when launched in 2021, Companies House plans to make it mandatory for all companies by 2024. This can only be a positive thing for limited companies of all sizes.

If you are interested in joining the PROOF scheme, we recommend you discuss your plans with your accountant if they usually deal with Companies House matters on your behalf. They may also have the authentification codes you require to join the scheme.