Mandatory Identity Verification (IDV)

Mandatory Identity Verification (IDV)

Upcoming Changes to Companies House: Mandatory Identity Verification

The UK government is implementing significant changes to the corporate registration process with the introduction of mandatory identity verification (IDV) for individuals involved in company operations. This move is part of the Economic Crime and Corporate Transparency Act 2023, which aims to increase transparency, reduce economic crime, and prevent fraudulent activity in company registrations.

Voluntary Verification: Starting April 8, 2025

From April 8, 2025, individuals will have the option to voluntarily verify their identities with Companies House. This can be done through the GOV.UK One Login service or via an Authorised Corporate Service Provider (ACSP) like Ideal Accountancy Ltd, which is fully accredited to carry out these verifications. The voluntary verification phase allows directors and Persons with Significant Control (PSCs) to familiarize themselves with the process before it becomes a mandatory requirement. This early adoption period will help businesses prepare for the upcoming changes.

Mandatory IDV Rollout: Autumn 2025

Mandatory identity verification will come into effect in stages:

• Autumn 2025: New directors and PSCs will need to verify their identities during the company registration process. This applies to anyone starting a new company or becoming a director or PSC of an existing company. 

• Spring 2026: Existing directors and PSCs will be required to verify their identities within 12 months of the new requirements being rolled out. This will coincide with the due dates for their confirmation statements, ensuring that the process is integrated smoothly into existing compliance procedures. 

The IDV Process

To verify their identity, individuals must provide various personal details to Companies House, including:

• Full name 

• Residential address (for the past 12 months) 

• Date of birth 

• Information regarding any previous names (if applicable) 

• Recent evidence of activity, such as a bank statement or utility bill, for address verification.

Verification can be completed through the GOV.UK One Login service or through an ACSP, such as Ideal Accountancy Ltd, who must meet the same verification standards as Companies House. Once verified, this information will be stored securely, and individuals will be listed as verified on the public register.

Consequences of Non-Compliance

Failure to complete the mandatory IDV process will result in several serious consequences for individuals and companies:

• Inability to file documents: Companies will not be able to submit essential documents to Companies House without ID verification. 

• Prohibition from incorporating new companies: Individuals who have not completed ID verification will be unable to register new companies. 

• Financial penalties: Individuals who fail to verify their identity could face fines or other penalties. 

These consequences are designed to ensure that only legitimate individuals can act as company directors or hold significant control over companies, reducing the risk of fraudulent company registrations.

Why This Change is Important

The introduction of ID verification is primarily aimed at combating fraud, money laundering, and other forms of economic crime that have been facilitated by anonymous company ownership. Fraudsters have previously been able to register companies using fictitious names, such as "Darth Vader" or "Santa Claus," to conceal their identity. This new system will make it more difficult for such fraudulent activities to take place.

Preparing for the Changes

To comply with the new regulations, businesses should begin preparing by:

• Familiarizing themselves with the ID verification process: Companies and directors should understand the documents and steps required for verification. 

• Gathering the necessary documentation: Individuals will need to ensure they have up-to-date documents that prove their identity and address. 

• Completing voluntary verification early: While the mandatory requirement will not take effect until 2025, early adoption can help prevent delays and ensure smooth compliance when the rules become compulsory. 

As an Authorised Corporate Service Provider (ACSP), Ideal Accountancy Ltd is equipped to assist businesses with the identity verification process, ensuring that you meet the new compliance standards in a timely and efficient manner.

Conclusion

These changes represent a significant step towards increasing corporate transparency and reducing the misuse of UK companies for illegal activities. The introduction of ID verification will ensure that Companies House maintains accurate and up-to-date information about those who control and manage companies in the UK. For businesses, adapting to these changes early is crucial to avoid disruptions in operations and penalties for non-compliance. The new requirements are expected to enhance the integrity of the UK's corporate landscape, making it harder for fraudsters to exploit the system.

For assistance with the ID verification process and to ensure full compliance with the upcoming regulations, Ideal Accountancy Ltd can help you navigate the requirements and get your business ready for the changes ahead.