Companies House changes
Huge swathes of company data may be wiped
Every firm incorporated in the UK has to file documents at Companies House. They are accessible to anyone from the Companies House website, from 2014 for free.
Ethical Consumer makes extensive use of Companies House records. They contain details of a company’s owners and directors, and for larger companies they disclose a lot of other useful information, including what the directors are paid. Many other organisations also use the data, including police investigators, the National Crime Agency, the Serious Fraud Office, lawyers, journalists and bank compliance teams.
Screenshot of the website.
However, the government’s company registration agency is now reported to be considering culling a huge amount of the information. While company records are currently kept for 20 years, they are suggesting cutting this to six years, which would result in the deletion of over 2.5 million records.
The reason they are giving is that they are facing “commercial and political pressure” to erase the information, especially from the directors of failed businesses and their “reputation management” firms, who claim that keeping it is inconsistent with data protection law.
But the thing is, information about company directors and owners is different from most other types of personal information. Companies are granted a huge legal privilege - the privilege of limited liability. The deal has always been that in return a company has to publish information about itself so that those engage with it can tell who they are dealing with.
A lot of people, including campaigners, the Serious Fraud Office and National Crime Agency, are very concerned about the proposal. Deleting these records will make it much harder to track criminal and dodgy corporate behaviour. For example, it will make it very difficult to see where someone has been involved in multiple failed companies.
And there may be even more serious consequences. Labour’s deputy leader Tom Watson has argued that it would “harm the global fight against corruption and tax avoidance”.Closing a limited company down has long been recognised as a way of opening up potential ways to dodge tax.
Tax Research UK director Richard Murphy said:
“The use and abuse of limited liability is a matter of considerable public importance and being able to trace someone’s track record is important.
“This move is one in the wrong direction and which would be grabbed upon with delight by any tax haven if they ever get near public registers.”
As yet, nothing is decided. Companies House has promised to hold a public consultation about the rule change before they go ahead.
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