In the second quarter of 2020, Companies House saw 176,115 new corporations set up. A 3.6% increase from this time last year. The rise is partly due to the many people who have lost their jobs in the pandemic and set up their own business instead. But some are trying to “game the system” in order to access more government funding. This has been possible because of the lack of fraud prevention measures at Companies House.
The chief executive of Companies House, Louise Smyth told Financial Times that they are now embarking on a 5 year transformation to improve the data management of registered companies and introduce better fraud prevention measures.
What are the changes?
The transformation of Companies House will involve significant operational developments. New technology is already being implemented to help staff with data entry and management. Staff will change too. More forensic, analytical and investigative roles will be needed if fraud prevention is really going to improve.
The Bigger Picture
The 5 year journey to better fraud prevention goes beyond coronavirus business support schemes. The government primarily want to tackle an estimated £90bn that is laundered through the UK’s financial system every year. So, it seems there are bigger fish to fry than someone trying to get an extra loan or two. But registering a false company or a company with false information is still fraud.
Good business means optimising financial performance. But you must also operate in compliance with statutory requirements. At CBHC, we don’t want our clients to make poorly informed decisions that might trip them up further down the line. That’s why we always offer professional, strategic advice with fraud prevention in mind.
There are tens of thousands of “common fraud” cases where criminals have registered a company false information. If you have registered a new business recently then you need to be responsible. Ensure that all of the information you provide is correct so that you do not risk appearing like a ‘shell company’. Companies House has not been able to act on suspicion in the past. This could change.
Daniel Thomas of FT says, the fraud prevention reforms will see “the most important changes to how companies are overseen in the UK for almost two centuries”. But don’t panic. When the reforms are eventually passed into law, we will know what to do.