What information is available from Companies House and how useful is it?

As forensic accountants we are often provided with copies of documents filed at Companies House but how useful are they?

According to its website, Companies House is responsible for:

• incorporating, maintaining and dissolving limited companies;
• examining and publishing company information; and
• promoting transparency and growth in the UK economy[1].

In March 2023, there were over 5 million organisations registered with Companies House of which 800,000 were incorporated during that year and 586,000 dissolved.  There are 29 types of corporate bodies required to register with Companies House of which over 95% are companies limited by share capital (“companies”).  Limited liability partnerships, companies limited by guarantee, unlimited companies and community interest groups are four other types of organisations required to register and which we regularly come across.

The information held by Companies House is, in the main, available to the public (with the exception of what is classed as “personal data”) free of charge.

Currently, companies are required to file:

• a form requesting a company be incorporated, listing its name, its industry, the initial directors and shareholders;
• its memorandum and articles of association setting out what the company will do and the way it will be managed;
• information pertaining to its registered office plus any changes;
• changes in the accounting period, company name, directors, persons with significant control (“PSCs”) and share capital;
• annual confirmation statements confirming that there are no changes to the standing data held by Companies House or provide details of any changes to that information;
• accounts;
• documents setting out any mortgages and charges and when the charge has been removed; and
• documents relating to any insolvency proceedings.

Whilst this appears, at face value, to be a large amount of information about a company, the available detail is often limited and this can prove frustrating.  For example:

• unless the company is classed as “medium” or “large”[2], it is only required to provide a balance sheet and limited notes which means the reader has no idea of the profit (or loss) the company has made in the period;
• public limited companies have six months from the year end in which to file their accounts whereas limited companies have nine months which means that the information can be significantly out of date by the time it is available; and
• directors’ details need only include a service address and can include corporate directors, meaning it is difficult to identify the individuals involved in a company.

Of course, this assumes that the required information is actually filed at Companies House and currently the sanctions for failing to file accounts or confirmation statements are limited.  The company may be deemed to be no longer carrying on a business and strike-off proceedings may be commenced but these can easily be halted by filing the overdue documents.

Under the Companies Act 2006, it is a criminal offence for directors to file accounts late.  It is a strict liability offence, so as soon as a company is late with its accounts, the offence is committed, and its directors are at risk of a criminal prosecution and subject to a potentially unlimited fine for each offence.  In addition, there is an automatic civil penalty for submitting accounts late.  That said, in practice, these sanctions are very rarely imposed.

Although filing penalties for 2022-2023 in England and Wales were £150 million, these do not appear to be a sufficient deterrent to drive compliance – of 1,938 charges made against company directors only 856 were convicted.

The other assumption is that the information filed at Companies House is accurate.  However, when filings are reviewed for a company as a whole, inconsistencies can be found.  For example common inconsistencies are:

• a change in the share capital may not be reflected in the accounts, or may not have been notified to Companies House; or
• the balance sheet does not balance, contains arithmetic errors, or changes when it is included as the comparative position for the following year.

Therefore, the extent to which Companies House “examines” information is questionable.  Much of this is due to its limited resources.  It employs approximately 1,300 people to oversee 5 million organisations.

The Economic Crime and Corporate Transparency Act 2023 is an attempt to boost the powers of Companies House and to improve corporate transparency.  Instead of being a passive recipient of information, the aim is to transform Companies House to be a more active gatekeeper with a wider remit of powers under four objectives:

1. to ensure that any person who is required to deliver a document to the registrar does so and that the requirements for proper delivery are complied with;
2. to ensure that information contained in the register is accurate and that the register contains everything it ought to contain;
3. to ensure that records kept by the registrar do not create a false or misleading impression to members of the public; and
4. to prevent companies and others from carrying out unlawful activities and facilitating the carrying out by others of unlawful activities.

Companies House is aiming to commence the new identity verification requirements by autumn 2025.  These will require all directors and PSCs for new incorporations to verify their identity at the point of incorporation.  There will then be a transition period of 12 months for existing companies which will be required to provide identity verification credentials for their directors and PSCs when their confirmation statement is due.

These objectives are welcome given the issues with the information as it currently stands.  However, the until the changes are rolled out it remains unclear how effective they will be. Government’s past history on IT implementation is poor, but anything that aims to improve the accuracy and integrity of information on the register is welcome, as should help drive transparency and trust in the UK economy, one of Companies House’s aims.

[1] https://www.gov.uk/government/organisations/companies-house/about#:~:text=We’re%20responsible%20for%3A,growth%20in%20the%20UK%20economy

[2] Companies which exceed two of the following three: turnover of £10.2 million; net assets of £5.1 million and 50 employees

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