Companies are preparing for a major shift in compliance as Companies House rolls out a new identity verification system aimed at boosting corporate transparency and tackling economic crime

CREDIT: This is an edited version of an article that originally appeared in SME Today

Earlier this year, Companies House officially launched a new identity verification (IDV) service, allowing individuals to confirm their identity either directly through GOV.UK One Login or via an Authorised Corporate Service Provider (ACSP). This development marked a significant step forward in the UK’s efforts to strengthen corporate transparency and combat economic crime.

The introduction of mandatory identity verification was one of the core reforms introduced under the Economic Crime and Corporate Transparency Act 2023. The legislation granted Companies House enhanced powers aimed at increasing the accuracy and reliability of company information, deterring misuse of corporate structures and supporting a more trustworthy business environment.

The goal of the IDV process is to provide a higher level of assurance about the individuals who are setting up, owning, running, or controlling UK companies. Whether verified directly with Companies House or through an ACSP, the level of verification will remain consistent ensuring that all individuals meet the same standard of identity assurance.

Under this new system, all directors, people with significant control (PSCs), and those filing on behalf of companies are required to verify their identities. Once the identity verification requirement becomes legally mandatory later this year, more than six million individuals are expected to go through the process during the first 12 months of implementation.

What Businesses Need to Do

All UK companies will need to ensure that their directors and PSCs are compliant with the identity verification requirements. Businesses that use intermediaries – such as accountants or corporate service providers – to manage their filings may find the transition more straightforward, as many of these providers will be registered as ACSPs and able to complete the process on behalf of their clients.

For those handling filings in-house, it will be essential to stay updated on when the IDV requirements become enforceable and to register for the GOV.UK One Login system if they haven’t already. Failing to comply could result in restrictions on filing capabilities or even penalties.

Impact on Small Businesses and Resellers

Small businesses and resellers – many of whom may not have dedicated compliance teams – are likely to feel the effects of this change most acutely. The administrative demands of understanding and fulfilling IDV requirements may require additional time, resources, or reliance on third-party support. It may also mean adapting internal processes and ensuring that all relevant individuals are aware of and meet their verification obligations.

A Step Toward Greater Business Integrity

While the new identity verification process introduces additional steps for business owners and stakeholders, it represents a significant move toward greater corporate accountability. By making it harder for fraudulent or anonymous actors to exploit the UK’s company framework, the government aims to foster a more transparent and secure business environment – benefitting legitimate businesses in the long run.