By Luke Photi, White Hart Associates Practice Manager and Head of MTD
New rules to prevent companies participating in illegal activities are set to impact anyone involved in running a business.
All company directors, Persons with Significant Control (PSCs) and other key individuals will need to have their identities verified as part of a crackdown on fraud, money laundering and tax evasion.
Up to 20% of UK companies are involved in illegal activities, with a cost of up to £60 billion a year in lost tax revenues for the government. With a public sector net debt of £2.8 trillion and rising, it has decided to act.
Voluntary verification has already started and will be mandatory by the end of 2026, so compliance is not a choice.
Those who don’t go through the Identity Verification (IDV) process will be committing a criminal offence, as will companies that have an unverified director or officer. Similar measures will apply to limited partnerships.
In addition to fines, unverified individuals will be restricted from submitting filings at Companies House. Companies without verified key individuals can be rejected and the company register can be publicly annotated as non-compliant which could affect insurance policies and the ability to raise finance.
Furthermore, unverified directors with a history of persistent breaches will face disqualification proceedings.
As part of our service at White Hart Associates (WHA), we have a dedicated team who can assist all your key staff with IDV. Alternatively, individuals can verify directly with Companies House (see below).
Timelines
The Companies House outline transition plan indicates that, by autumn or early winter 2025, IDV will become compulsory on incorporations for new directors and PSCs.
By spring 2026, Companies House expects individuals submitting filings to have completed IDV.
Other existing directors and PSCs will have a transitional period until the company’s next confirmation statement to complete IDV. This may give them until later in 2026 but in practice, it may result in a short timeframe for the relevant individuals of many businesses to become compliant.
Consequently, preparation will be key and as voluntary verification has already started, businesses should consider acting as soon as possible.
IDV is expected to be a one-off requirement. Verified individuals will receive a unique code that will also be linked to any senior roles, for example directorships, held in other businesses.
The WHA approach
To manage the IDV process for our clients, we use a software provider called Tiller and walk you through the process, so that you will not have to register your IDV directly using the government portal. You can read more about Tiller here: https://www.tillertech.com/services/identity
In preparation, businesses should familiarise themselves with the reforms and assess the impact of the changes on their boards.
It’s particularly important to raise awareness at board level and among PSCs about IDV and any issues created by the timings, and to consider how the process will be managed for directors, LLP members and PSCs. Key actions are as follows:
- Determine whether individuals will be encouraged to verify directly or if an authorised corporate service provider (ACSP) will be engaged
- For large or complex businesses, decide whether the IDV process will be managed in stages
- Ensure individuals have up-to-date and accurate documents to complete IDV
- Put in place processes to ensure directors and LLP members complete IDV in a timely manner when appointed
Going it alone
Individuals can now voluntarily verify their identity directly with Companies House via the GOV.UK One Login service and then use one of three channels:
- the ID Check app, using photo ID (eg UK passport) and completing a facial scan
- the web portal, by completing security questions online
- in person at a Post Office offering in-branch verification (also requiring photo ID)
Individuals will need to provide certain details, including a valid email address, and documentation.
While it is envisaged that most individuals will be able to verify directly via the free One Login service, there will be some limitations, notably the web portal will only be available to individuals with UK documentation. Meanwhile, all three channels will require at least one form of biometric evidence.
If individuals are unable to satisfy the documentation requirements for direct verification, they will need to engage an ACSP.
WHA are specialist accountants for the travel industry. Visit whitehartassociates.com or contact 0208 878 8383 for more information.
