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The recent increase in media interest in personal identity theft has provided a reminder that company identity theft at Companies House is still a major problem for UK limited companies. These companies are being encouraged to proactively take action to deal with company filing fraud at Companies House. There are over two million company records held by Companies House which currently reports that of the five hundred thousand documents filed at Companies House each month, including company accounts, approximately fifty are identified as false.

Company hijacking at Companies House can involve:

The company directors are changed - Fraudsters file change in company director forms 288 to notify Companies House of a change to the company's officers. These will either be stolen identities of real people or completely fictitious individuals pretending to be a company director. They will also notify Companies House that the company's true officers have all resigned.

The companies registered office is changed - Fraudsters file a form 287, signed by a bogus company director, to change the company's registered office to an address of their choice at Companies House. Once this is done, any communications from Companies House will be sent to the company at the new registered office, ensuring that the company itself doesn't receive notifications from Companies House of any future changes.

Supporting documentation may be obtained - The fraudsters notify Companies House and effectively have the company under their control as far as third parties are concerned, as they appear to be the legitimate company directors. In order to give credibility in their subsequent dealings with third-parties, the fraudsters may request, for example, a Certificate of Good Standing from Companies House. This official document then confirms the status of the fraudsters as being the company directors.

As far as third parties are concerned, the fraudsters appear to have gained control of a company and appear to be the geniune company directors. This can include obtaining supporting documentation from Companies House and then approaching suppliers of high value, easily disposable, goods and placing orders apparently on behalf of the company, with delivery being made to the company's "new" bogus registered office, which the fraudsters can obviously access.

In another case, the owner of a business was surprised to discover that the registered office of his family business had been changed from the address at which it had been located for the last hundred years. Even the company's nameplate was stolen from the building where it was located.

Since April 2005, identified instances of company filing fraud seem to have leveled off below the peak, but are still at a relatively high historical level of approximately fifty incidents a month. The Metropolitan Police agree that a single filing fraud could cost £1 million and could very seriously damage the victim business.

One large part of the fraud is that the company itself doesn't discover the changes at Companies House until the fraudsters have had time to complete their scam and then disappear.

Other frauds include setting up bogus companies, falsely adjusting company accounts and even stealing the identity of the auditor to ensure that these company accounts appear to be credible. A credit agency has recently revealed that nine auditors have had their details taken to approve a false set of company accounts over the last nine months. Another hundred sets of company accounts have been set up using completely fictitious auditor details over the same period.

Companies House now offers a protected on-line filing scheme (PROOF) where only mutually approved documents, including company accounts, are registered. Companies are also advised to use an online monitoring service advising companies each time a change of record has been made.

It is highly likely that 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, including company accounts, that is misleading, false or deceptive in a material particular, will be liable to imprisonment for up to two years, or a fine, or both.

Article Source: ArticleSoft.com

About the Author

Phil Smith is the managing director of creditgate, one of the UKs leading and fastest growing online providers of business credit and company information. Before setting up creditgate.com two years ago, Phil was previously employed for over 20 years within the insolvency department of Pricewaterhousecoopers.

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