Directors, brace yourself for Putin-inspired changes, albeit dictated by Companies House
The inability of Companies House to police the data it puts on its register and the implications for people depending on it has long made the UK’s claims to be a sophisticated business environment a laughing stock round the commercial world.
Among other consequences has been the transformation of London into one of the world’s most prolific venues for laundering dirty money, writes Nick Hood, senior business adviser at Opus Business Advisory Group.
Putin, the catalyst
Now, we have that nice man in the Kremlin to thank for forcing the government into finally doing something tangible about it through the Economic Crime and Corporate Transparency Bill, which is currently wending its way through parliament. In that sense it’s a case of ‘from Russia with reform.’
The legislation contains a host of measures aimed at cleaning up our act, of which by far the most important and most relevant to contractors who operate through PSCs are a raft of changes to how Companies House receives and processes accounts and other data sent to it.
Seven key Companies House changes set to affect limited company directors
These are the main areas for reform of Companies House.
1. Identity verification
The introduction of identity verification for all new and existing registered company directors, ‘people with significant control’ and anyone delivering documents to the registrar. The aim of this is to improve the accuracy of Companies House data and to support both business decisions and law enforcement investigations.
2. Policing company creation and data quality
The broadening of the Companies House registrar’s powers so that they can take on a role as a more active gatekeeper over company creation, and act as a custodian of reliable data. There will be new powers to check, remove or decline information submitted to or already on the companies’ register. It’s something else that, like the beefed-up ID verification, Mr Oli Garch probably won’t like, but which the average contractor who has their ducks in a row and is prepared to invest a bit of extra time, shouldn’t find too much of a problem.
3. Financial data
Improvement of the financial information on the register so that it is more reliable, complete and accurate and it reflects the latest advancements in digital technology.
4. Investigation and enforcement
Companies House will be given more effective investigation and enforcement powers and will improve its cross-checking of data with other public and private sector bodies.
5. Interaction with law enforcement agencies
Companies House will be able proactively to share information with law enforcement bodies where it detects anomalous filings or suspicious behaviour. Another one in the eye of Mr Oli Garch!
6. Protecting personal information
The protection of personal information provided to Companies House from the activities of fraudsters and scammers will be enhanced.
7. Misuse of corporate entities
There will be broader reforms to clampdown on the misuse of corporate entities. The sort of entities that could – could -- be housing lots of roubles made from ill-gotten-gains!
Implications for contractors? TBC
So that’s the outline from Companies House and the main reforms that will affect contractors, with an inevitable increase in their admin burden.
But with these ‘reforms’ -- not a term which PSCs have had much cause to love of late – there could actually be some benefit to you as a limited company director. To be covered more fully in a forthcoming piece by us, exclusively for ContractorUK, those benefits include better quality public domain data. So the reforms could spell the difference between engaging or operating via an entity that’s reputable or rogue.
A second upside to reform…
Another benefit of the Companies House reforms is that in certain fields, you should be able to tweak your own data, rather than the current requirement on some of it that you must apply for a court order! But ever with Kremlin loyalists in mind; Companies House’s changes might have restrictions that overspill on you too – notably the registrar having the power (in some circumstances) to force the name of a limited company to be changed. And there you were, hoping one of 2021’s disallowed names on Companies House -- ‘Building That Fought Hitler Ltd’ -- could be swapped out with a more modern-day dictator whose fingerprints are all over these reforms!