Reports suggest that UK limited companies themselves are increasingly subject to ID theft with fraudsters known to change details of the appointed directors and registered office as a precursor to an elaborate scam. Once under their control, criminals are able to use the company to take out loans, make expensive purchases, or even hijack the Company for something more sinister.
Such is the risk that Companies House has just restated its advice for companies looking to protect themselves. Top of the list is the protected online filing scheme known as PROOF. This is now a well-established way to protect a company from unauthorised record changes by preventing the filing of certain paper forms which, if accepted for filing, would assist the criminal. Crucially, once a company becomes registered for PROOF it can no longer lodge notification of a new registered office or changes to directors on paper. Instead, all such changes must be made online using secure login details.
Part of the problem is the time taken for a legitimate director to discover that fraudulent filings have been made. After all, directors are not generally in the habit of checking their filing history on a regular basis and this delay creates a perfect window of opportunity. But a newly launched free Companies House service aims to address this by automatically sending an email notification every time a new document is filed for this, or any other, registered company. Learning of such changes early on is critical to help damage limitation.
Surprising to most is the limited extent of the registrar to investigate potential fraud. Although the official advice is to contact it early on, the registrar has no investigatory powers or powers of prosecution. In such circumstances, the Police and Action Fraud are better placed to assist.
In fact, it is only through the recent introduction of specific legislation that a mechanism exists to resolve disputes concerning registered office addresses. If a complaint is received that an address being used is not authorised, Companies House has the power to change the record following compliance with a dispute process. Although a step in the right direction, unfortunately, the timescales involved are such that this is unlikely to either deter or prevent fraudulent activity.