More enforcement powers for Companies House
The government aims to strengthen the powers of Companies House and tackle abuse of limited partnerships in proposals for a second Economic Crime Bill
The social and economic cost to the UK from economic crime is estimated at £8.4bn per year. To help tackle this, the government recently brought forward the Economic Crime (Transparency and Enforcement) Act that included provision for a new register of overseas entities owning or buying property in the UK, on which this Bill will build.
One of the measures in the Economic Crime and Corporate Transparency Bill will provide Companies House with more effective investigation and enforcement powers and introduce better cross-checking of data with other public and private sector bodies.
In future, Companies House will be able to verify the identity of people who manage, own and control companies and other UK registered entities. This will improve the accuracy of Companies House data, to support business decisions and law enforcement investigations.
It will also tackle abuse of limited partnerships (including Scottish limited partnerships), by strengthening transparency requirements and enabling them to be properly wound up. Currently it is too easy to set up a partnership with opaque ownership and little oversight.
In a wide-ranging bill, the government will also introduce powers to more quickly and easily seize and recover crypto assets, which are the principal medium used for ransomware. The creation of a civil forfeiture power will mitigate the risk posed by those who cannot be criminally prosecuted but use their funds to further criminality.
Neil Williams, deputy head of complex crime at Reeds Solicitors: ‘The new measures to be introduced in the Economic Crime Bill (ECB) will see the renovation of Companies House, to allow it to develop from its passive data holding role, to that of a gatekeeper, questioning and scrutinising information to preserve the integrity of the data it holds.
‘The expansion of its role, together with the introduction of powers to bolster its ability to uphold its new elevated status, is aimed making Companies House fit for purpose in the digital age. For too long, the ease by which information can be shielded from authorities has been facilitated by the passive function of Companies House.’
Christina Fitzgerald, president of insolvency and restructuring trade body R3, said: ‘This legislation needs to be introduced quickly and there are some issues that need to be resolved before the Bill reaches the statute book.
‘When appointed to deal with an insolvent company, insolvency practitioners need to be given automatic access to all of the information captured by Companies House about the company and its directors. This isn’t part of the Bill at the moment but making access to this information automatic would make it easier to investigate director misconduct and uncover assets for the benefit of the company’s creditors.’
Story wrote by Sara White.