Many company directors and shareholders have recently been receiving emails from Companies House asking them to complete Identity Verification checks. We know from our clients who have received these that for many their first reaction is “Is this a scam?”. The answer is no!
In response to rising concerns over corporate fraud and misuse of company structures, Companies House is implementing significant reforms to enhance transparency and accountability. The main element of these reforms is the requirement of mandatory identity verification (IDV) for individuals involved in UK companies. These changes, stemming from the Economic Crime and Corporate
Transparency Act 2023 (ECCTA), aim to deter fraudulent activities and ensure that only legitimate individuals control and manage companies.
Why Is Identity Verification Being Introduced?
The new IDV requirements are designed to:
• Reduce Fraud: Prevent individuals from using fake identities or impersonating others to establish or control companies.
• Enhance Transparency: Provide clearer and more accurate information about company directors and persons with significant control (PSCs).
• Improve Trust: Boost confidence among investors, regulators, and the public in the integrity of the UK corporate register.
Who Needs to Verify Their Identity?
Mandatory IDV applies to:
• Directors: Individuals appointed to manage a company.
• Officers: Individuals who hold responsibility equivalent to a director and those who file for a company i.e. members, general partners, managing officers, company secretary.
• Persons with Significant Control (PSCs): Those who hold significant influence or control over a company (owning more than 25% of a company’s shares)
• Members of Limited Liability Partnerships (LLPs): Partners in LLPs
• Authorised Corporate Service Providers (ACSPs): Entities like accountants, solicitors, and company formation agents who assist in company registrations and filings.
How to Verify Your Identity
Verification can be completed through two primary routes:
1. Direct Verification with Companies House
Individuals can use the GOV.UK One Login service, which offers:
• ID Check App: Utilise a smartphone to scan a passport or biometric residence permit.
• Web Portal: Answer security questions online.• Post Office In-Branch Verification: Present photo ID at participating Post Offices
This service is free of charge and provides a unique Companies House personal code upon successful verification.
2. Verification via an Authorised Corporate Service Provider (ACSP)
ACSPs (also known as a Companies House authorised agent), such as accountants and solicitors, can verify identities on behalf of clients. To do so, they must register with Companies House and comply with anti-money laundering (AML) regulations.
Consequences of Non-Compliance
Failure to complete IDV can lead to:
• Rejection of incorporations: Companies with unverified directors or PSCs may have their incorporation applications rejected.
• Criminal offences: Continuing to act as a director or PSC without verification will be a criminal offence, potentially leading to fines or disqualification.
• Public annotation: The company register may indicate non-compliance, affecting the company's reputation and operations.
• Inability to file documents: Unverified individuals cannot submit filings to Companies House.
Key Dates
• 8 April 2025: Voluntary IDV for directors and PSCs introduced.
• Autumn 2025: Mandatory IDV for new incorporations and appointments.
• 12-Month Transition Period: Existing directors and PSCs must complete IDV by their next confirmation statement filing.
• Spring 2026: IDV becomes compulsory for individuals submitting filings on behalf of companies.
Preparing for the Changes
• Early verification: Take advantage of the voluntary verification period to ensure compliance ahead of mandatory requirements.
• Educate Stakeholders: Inform directors, PSCs, and relevant personnel about the new requirements and timelines.
• Engage ACSPs: If using an ACSP, ensure they are registered and compliant with AML regulations.
• Monitor Developments: Stay updated with guidance from Companies House and professional bodies to navigate the evolving landscape.
At M&S Accountancy and Taxation we understand that these reforms represent a significant shift in UK corporate governance. By proactively engaging with the verification process, businesses can ensure compliance and contribute to a more transparent corporate landscape. As a registered ACSP, we would happily carry out this verification on your behalf. Please contact the office if you require assistance with the process or if you would like to register us as your ACSP to carry this out on your behalf.
