The slow evolution of Companies House reform

In 2023, the Government promised the biggest change to UK company law since 1844 with the passage of the Economic Crime and Corporate Transparency Act (ECCTA). Fake directors such as “Adolf Tooth Fairy Hitler” would become a thing of the past and we would finally see a crackdown on UK shell companies appearing in money laundering scandals. 

A year and a half on and this radical shake-up of Companies House continues, which can be hard to keep track of. Below we take stock of what’s been done, what’s still to do and where further changes to the law are needed to end the abuse of UK companies. 

What has been accomplished? 

Reforming Companies House is a bit like restoring an old house, the foundations need to be secured before extra storeys are added or finishing touches are put in place. This is largely what Companies House has been doing for the last 18 months, making the change from a passive registrar – which just received company information on trust and published it - to an active part of the UK’s economic crime architecture.  

In March 2024, Companies House began making use of new powers to query information it receives to improve the quality of data on the register. Instead of just taking filings on trust, the Registrar can now reject any information it finds to be incorrect – no more ‘Chicken Thiefs’ as directors. Additionally, Companies House can now share securely any suspicious information it finds with law enforcement and regulators. This should now make it harder for mistakes and false information to make it onto the register, such as the unlikely company owners who are under two years old, and help support other parts of the UK’s response to economic crime. To underpin this transition, Companies House was given a cashflow boost, with standard company incorporation fees increasing from £12 to £50. This additional revenue should help it to build new systems and hire more staff to step-up the fight against shell companies and false filings. But it remains to be seen whether this is enough. 

New analysis from Tax Policy Associates released last week shows the scale of Companies House’s task in cleaning up the five million companies already on the UK register. This research identified 65,000 firms which appear to be breaching beneficial ownership rules by declaring an offshore company as a “person of significant control”, something which in most cases is not within the law. Transparency International UK, our partners in civil society, and the Treasury Select Committee all recommended a basic incorporation fee of £100, that would still be very competitive internationally. The Government should keep a close eye on whether these reforms need more resourcing, and consider a fee increase if this is the case.  

On the ‘to do’ list 

Companies House is yet to integrate two of the biggest reforms within ECCTA – the authorised corporate service provider (ACSP) system and identity verification. These will be vital to getting to grips with rogue formation agents setting up networks of shell companies and ensuring identities can’t be stolen to set up companies in the names of other people.  

The ACSP regime is intended to stop rogue formation agents incorporating and managing shell companies on behalf of criminals – often from abroad, beyond the reach of UK regulators and law enforcement. Research by ourselves and investigative journalists have highlighted the pervasiveness of this problem. Under this change, only trust and company service providers registered in the UK for anti-money laundering purposes will be allowed to set-up and administer UK companies on behalf of clients. On 18 of March 2025, the ACSP regime started on a voluntary basis, and will become mandatory at a later date. 

However, this regime risks being undermined by weak regulators in the UK. There are still 25 different bodies for policing know your customer rules, most of whom are ineffective and deeply conflicted, being both lobbyists for their industry and their supervisors. Despite several Government consultations for reform, progress remains slow. We’ve called for a radical shake-up, cutting the number of regulators from 25 down to three. Implementing this change effectively, and ensuring close cooperation between regulators and Companies House, are crucial to making the ACSP regime a success. 

The verification regime also presents a welcome step forward, but one with its own risks. In 2026, it will become a legal requirement for those wanting to be a registered director or owner of a company to confirm their identity through an official ID. This represents crucial progress in helping to stamp out the fraudulent impersonation of others on the register. However, these reforms only go so far as confirming those named in filings are real people. What it does not do is confirm whether or not that real person is in fact merely acting on behalf of others as nominees. This presents a serious but not insurmountable challenge for Companies House’s new intelligence units. 

What’s still to come? 

Whilst these measures should make UK companies harder to abuse, determined criminals will still be able to take advantage of two other key weaknesses. 

Limited Liability Partnerships (LLPs) and Limited Partnerships (LPs) 

You can still form an LLP or LP without any identifying a natural person, making them an ideal UK wrapper for secretive offshore companies. Research by our Russian colleagues in exile found continued use of LLPs and LPs in the trade of high-risk goods to Russia and from Russian occupied Ukraine. To address this remaining risks, non-Scottish Limited partnerships should be required to disclose their beneficial owners, whilst LLPs and Scottish Limited Partnerships should be required to have a named “natural person” as either a member or managing officer. 

Shareholder data 

Whilst ID verification will ensure information on owners and directors of companies becomes more reliable, shareholder data will remain unverified and difficult to access. This will make it harder to verify the ownership structure of companies. In cases where firms claim to have no owners, shareholder information is all we have to help get an understanding of those behind a company. Currently shareholder data is limited, consisting of just a shareholder name held in inaccessible PDF documents. This makes the data harder to analyse at scale, allowing secretive owners to go undetected. Shareholder information should be published as open data, with similar details as are provided for directors and beneficial owners; for example, months and years of birth for individuals, and jurisdictions of incorporation for corporate shareholders. 

A race against time 

With UK companies continuing to be used in money laundering schemes and an assessment by the Financial Action Task Force (FATF) on the horizon, the pressure is on to get Companies House reform right. The foundations for a successful regime are now in place, however it will take a concerted effort from across the economic crime architecture to deliver results. Companies House, anti-money laundering regulators and the police need to work together to crack down on rogue formation agents and take those submitting false information to task. The Government also has work to do to close remaining loopholes which allow clever criminals to remain hidden behind UK companies and take decisive action to weed-out underperforming regulators. Fixing these will be vital to cutting off the supply of UK companies to crooks and making Britain a safer place to do business.