With new penalties and powers, a ‘talking tough’ Companies House warns PSCs not to ignore its warnings.
Most limited company directors shouldn’t get the wrong idea about Companies House “talking tough” on new penalties and powers.
As part of the Economic Crime and Transparency Act, the registrar’s new penalty regime can now charge £250 for a “minor” first offence.
‘Serious offence’
Even steeper fines have been introduced for a second minor offence (£500), third offence (£750), and “fourth offence and more” (£1,000).
For “serious” and “very serious” offences, Companies House fines of £500 can range up to £2,000 — for a ‘fourth very serious offence.’
‘About time too’
But ‘if not now’ to increase financial sanctions to help deter already significant misuse of the register, ‘then when,’ according to Louise Rayner.
“I would say about time too,” Rayner, a chartered accountant began yesterday to ITContracting.com.
“For far too long, some directors haven’t taken their fiduciary responsibilities seriously and have hidden behind the corporate veil.”
‘Firmly but fairly’
Founder at NumberMill, Rayner observed Companies House saying it will enforce its new penalties and powers “firmly but fairly.”
Companies House gave an example — it may now penalise PSCs who “ignore warnings” but will offer support on compliance, such as CS01filing.
The registrar also said on September 30th 2024 that the most serious offences could trigger civil action, director disqualification or in the most egregious cases, criminal prosecution.
‘Holistic enforcement’
Companies House signalled it will be working more closely with the likes of the Insolvency Service, as part of it probing and prosecuting offences.
With such partners, it talked of sharing intelligence, referring cases, and “holistic enforcement,” as part of its wider enforcement policy (updated on September 27th 2024).
This ‘firm but fair’ approach by the registrar has already started, with the removal of registered office addresses and documents relating to 64,300 companies (between March and September 2024).
‘Making companies more transparent and accountable, with a cleaner registry’
In the eyes of legal advisory Lawdit, Companies House’s new approach is surely the way forward — if fairness to both law-abiding directors and the UK as a whole matters.
The legal advisory said yesterday: “For the UK economy, the Companies House reforms boost confidence among investors, partners, and consumers.
“They should ensure that companies registered in the UK are more transparent and accountable.
“A cleaner, more reliable registry means that honest businesses face less risk from fraudulent competitors, fostering a fairer marketplace and allowing legitimate businesses to thrive.”
‘Commitment to clean up’
The advisory hinted it hasn’t always been this way on Companies House.
In fact, Lawdit’s Michael Coyle spoke to ITContracting.com about the Companies House reforms hopefully succeeding in “reinforcing” trust.
“By introducing stricter penalties for inaccurate filing and requiring verified identities… these changes signal a significant commitment to clean up”.
Lawdit’s co-founder, Mr Coyle said Companies House now having the power to investigate and reject suspicious data could “deter illicit activities.”
‘Companies House making an effort to reach out’
The solicitor is not alone in noticing a step up.
Gareth Wilcox of Opus Restructuring & Insolvency says he’s witnessed how Companies House is “making an effort to reach out”.
“[Officials from Companies House] are attending seminars, raising awareness and hiring additional resources.
“But with an estimated one million non-legitimate companies still on the register, it’s clear Companies House must prioritise”, Wilcox told ITContracting.com.
‘Very low barrier to entry’
The Opus partner favoured even steeper price increases than those that Companies House introduced on May 1st 2024.
Wilcox explained: “These new penalties and powers are all-encouraging for protection. And clearly are a worthy investment of the increased [service] fees.
“But one has to wonder whether it would not have been better to increase Companies House [services] fees even more.
“That would have freed up more resources…[to help take on] the many potential targets.
“Raising the online fee to incorporate from £12 to £50 — as Companies House did on May 1st, is fine. But it remains a very low barrier to entry.”
‘Potential for Companies House to go further’
Lawdit has its own ideas for the registrar too, but they focus on how and where the executive agency of the Department for Business and Trade ‘cleans up’ next.
Mr Coyle explained to ITContracting.com: “Looking ahead, there is potential to go further.
“Expanding identity verification requirements to cover more types of filings, and introducing even stricter scrutiny for high-risk industries, could add another layer of security.
“Enhanced collaboration between Companies House and law enforcement agencies to follow up on suspicious activities could also accelerate the detection and prevention of fraudulent schemes.
“As these reforms continue to unfold, the UK could become a model for business transparency globally, further securing its reputation as a trustworthy place to do business.”
‘Company registered offices defaulted to the registrar’s address’
Coyle called the removal of 64,300 inaccurate entries, and regular strike-off of companies using fraudulent addresses (at a reported rate of 3,000 a week), “real progress.”
“We’ve certainly seen an increase in companies having their registered office ‘defaulted’ to the registrar’s address,” echoed Opus’s Mr Wilcox.
The insolvency partner added: “So Companies House is certainly ‘talking tough’ [and actually using its new powers to boot.]
“But it’s intentionally errant directors and individuals abusing the register who should be concerned by this welcome move from Companies House to bolster the business landscape’s integrity; not bonafide directors following the rule book.”
‘Good for genuine entrepreneurs’
NumberMill’s Ms Rayner agreed, saying last night to ITContracting.com: “Alongside other governance crackdowns, such as the Criminal Finance Act and insolvency rules that now prevent [directors] walking away from tax bills and creditors, these new Companies House powers and penalties can only be good for the genuine, honest entrepreneurs out there today.”
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