New Companies House Rules Mean Directors Must Verify Their Identity or Face Penalties

British companies are bracing for sweeping changes at Companies House as mandatory identity verification for directors and significant controllers comes into force. From 18 November, all company directors and persons with significant control must formally verify their identity or risk severe penalties, including substantial fines and potential imprisonment, under the Economic Crime and Corporate Transparency Act.

This overhaul represents the most significant reform of Companies House processes since the Victorian era. The move aims to combat economic crime and identity theft, following mounting public concern about fraud within the company registration system. For years, the cost of setting up a business in the UK was far lower than elsewhere, with minimal checks on the identities of those registering companies. This light-touch regime led to repeated scandals, from mass frauds involving thousands of companies at a single address, to individuals discovering businesses registered without their consent at home addresses.

The new system requires directors, PSCs and authorised corporate service providers to verify themselves using a government One Login account. Identity can be confirmed via a mobile app, by answering security questions online, in person at select Post Office branches, or through an ACSP such as an accountant or solicitor. Key documents like passports or driving licences will be needed. Once verified, individuals receive a personal code linking their identity to their Companies House records, a code essential for most future filings and appointments.

Despite the significance of these changes, research shows a majority of directors are not yet confident in their understanding of the new requirements. Take up since the voluntary system began in April has seen over one million identities verified, but confusion remains, particularly among directors of international businesses and those unfamiliar with the new digital procedures. Advisers caution that the verification process may take time to navigate, especially for those reliant on agents or less familiar with government portals.

The government maintains that these reforms are vital in raising transparency, boosting trust in British business, and protecting national security. The message for directors and controllers is clear: act now to verify your identity or risk severe consequences as the law takes full effect over the coming year.