The identity verification regime introduced by the Economic Crime and Corporate Transparency Act 2023 continues to be rolled out by Companies House and, although many businesses are aware of the changes, a surprising number of directors and Persons with Significant Control (PSCs) have yet to take action. As a result, some companies are only discovering the issue when they need to make a filing.
Identity verification is intended to improve the accuracy of the Companies House register and make it harder for fraudsters to misuse UK companies. Under the new regime, directors and PSCs must verify their identity and obtain a personal code which links them to their Companies House roles and filings. Verification can be completed directly through GOV.UK or via an Authorised Corporate Service Provider (ACSP).
For many businesses, the key point is that the obligation is personal. Whilst accountants, company secretaries and solicitors may assist with Companies House filings, each individual director and PSC remains responsible for ensuring that their own identity has been verified.
Common pitfalls
Assuming the company will deal with it
One of the most common misconceptions is that identity verification is a requirement that falls on the company, rather than the individual. This is not the case. Every individual who is required to verify must do so in their personal capacity, even in circumstances where professional advisers are handling the filing process.
Forgetting about PSCs
Many business owners focus on the filing requirements for directors, but overlook PSCs. In owner-managed companies, this may not cause any issues as the same individual is often both a director and a PSC. However, where ownership structures are more complex, there may be PSCs who are not directors and who will still need to complete the verification process.
Waiting until a filing deadline
The requirements are increasingly intertwined with Companies House filing obligations. Leaving verification until the last minute may lead to delays, rejected filings and unnecessary administrative pressure when a confirmation statement or other filing becomes due.
Overlooking changes in ownership or management
Businesses that regularly appoint directors, issue shares or restructure their group should take particular care. Any new director appointments or changes to a company’s PSCs may trigger additional identity verification requirements before certain filings can be completed.
Why it matters
The consequences of non-compliance can be significant. Delays to Companies House filings can impact acquisitions, investments, corporate restructurings, refinancing exercises and routine corporate administration. In some cases, Companies House may refuse or reject filings where identity verification requirements have not been satisfied, which can be particularly problematic in relation to corporate projects which require Companies House filings to be made within tight timescales. Discovering that a director or PSC has not completed identity verification at a critical stage can cause avoidable delay, additional costs and frustration for all parties involved.
There are also potential enforcement consequences. Individuals who fail to comply with the new requirements may face financial penalties and may be unable to make or support certain Companies House filings until their identity has been verified.
What should businesses do now?
Businesses should review their current directors and PSCs, confirm who is required to verify their identity and ensure that the process has been completed well before any upcoming Companies House filing deadlines. Early action is generally far easier than dealing with issues when a transaction or filing is already underway.
For assistance with general corporate governance matters, please contact our Corporate and Commercial department on 0116 289 7000 or info@bhwsolicitors.com.