What is Company Identity Theft – How to beat it

The recent upsurge of media interest in personal identity theft has provided a reminder that company identity theft is still a major problem for UK incorporated businesses who are being encouraged to “take ownership of their own public record” to combat company filing fraud in a new white paper by accountancy software developer, Digita.

There are over two million company records held by Companies House which currently reports that of the 500,000 documents filed each month, approximately 50 are identified as false.

Company ID theft or company hijacking can involve:

• The registered office is changed.
• The officers are changed.
• Supporting documentation may be obtained.

The White Paper, “Keeping The Record Straight”, reveals that since April 2005 identified instances of company filing fraud seem to have leveled off below the peak, but still at a relatively high historical level of approximately fifty incidents a month.

Frauds include setting up bogus companies, falsely manufacturing accounts and even stealing the identity of auditors to ensure that these accounts appear to be credible.

Companies House now offers a protected on-line filing scheme (PROOF) where only mutually approved documents are registered and a monitoring service advising companies each time a change of record has been made.

The new Companies Act will create a new offence under which a person who knowingly or recklessly delivers or causes to be delivered (to Companies House) a document that is misleading, false or deceptive in a material particular, will be liable to imprisonment for up to 2 years, or a fine, or both.

If every company were to opt in to the PROOF scheme tomorrow, and of course guard their company authentication codes as carefully as they guard their bank account PIN numbers, then the phenomenon of company hijacking would almost certainly disappear overnight.

Related resources: companies act 2006 | business startup document

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