Companies House is set to introduce significant changes to its enforcement and registration processes. These changes form part of the Economic Crime and Corporate Transparency Act 2023, which aims to crack down on fraud, money laundering, and abuse of the company register.
Starting this autumn, Companies House will issue financial penalties to companies that fail to comply with registration rules. Penalties begin at £250 and can rise to £2,000 for repeated breaches. More serious offences could lead to director disqualification, civil action, or even criminal prosecution, with the potential for a criminal record.
The enforcement will be carried out in partnership with the Insolvency Service and other authorities, ensuring that companies follow the rules set out in the new legislation. Minor first-time offences will attract a £250 penalty, increasing to £1,000 for repeated violations. For more serious offences, the initial penalty starts at £500, increasing to £1,500 for repeat breaches. The most serious offences will attract penalties starting at £750 and rising to £2,000 for continued non-compliance.
In addition to fixed penalties, daily rate penalties may be applied for continuing offences. Companies will not be fined if they take corrective actions within 28 days of receiving a penalty warning notice.
Enhanced oversight of the company register
Companies House will also have increased powers to ensure the accuracy of information in the company register. These include requirements for proper document delivery, ensuring that the information provided is not misleading, and preventing unlawful activities.
Martin Swain, Director of Intelligence and Law Enforcement Liaison at Companies House, emphasised the importance of these reforms, stating:
“Where guidance and support are not enough to ensure compliance, we will use these new powers to enforce the law fairly and proportionately, improving the quality of the data on our registers and helping to prevent economic crime.”
Identity verification for company directors
A major component of the Economic Crime and Corporate Transparency Act 2023 is the introduction of identity verification for company directors and persons with significant control (PSCs). This is aimed at reducing fraud and abuse of the company register.
The identity verification process will begin in early 2025 and be phased out over the following years. The first affected will be accountants, solicitors, and other trust and company service providers (TCSPs), who will be authorised to carry out client identity checks. By autumn 2025, identity verification will be compulsory for new directors and PSCs at the point of incorporation, with a 12-month transition period for existing companies to comply.
This move will affect more than seven million company directors in the UK; however, Companies House will provide ample notice to ensure that directors and PSCs can meet the new requirements.
Future reforms and IT investment
The rollout of identity verification is just one part of a broader reform agenda. Companies House has also announced plans to move towards fully automated accounts filing by 2027, with the eventual elimination of paper returns. This shift will require significant investment in IT infrastructure and new processes to ensure the smooth operation of these changes.
Companies House said:
“This is a large and complex set of changes, which will be introduced in phases over the coming years. We will take an iterative approach, testing and adjusting processes as needed.”
Companies House increased its fees in May 2024 to fund these changes and further fee reviews will be carried out annually on a cost-recovery basis.
Looking ahead
These reforms represent a significant overhaul of Companies House’s operations, with further transparency measures expected by spring 2026. This includes improved access to information on shareholders and reforms to the registration process for limited partnerships (LPs).
Companies House is also set to introduce around 50 statutory instruments over the next 18 months, with transitional periods and implementation activities continuing until 2027. Given the complexity of these changes, Companies House has acknowledged that adjustments to timelines may be necessary as the new systems and services are developed.
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