Sensemaker Daily
More than half the companies registered in Northern Ireland since the beginning of this year have Chinese nationals listed as officers, Tortoise research has revealed.
So what? Companies House, the UK’s register of companies, is a wild west. For £12 any person, no matter where they are in the world, can create a limited company in the UK within minutes. All they need is a debit card and an internet connection. No ID is necessary – and no other rich country makes it so easy.
Since last spring, the number of newly incorporated companies registered by Chinese nationals on the Northern Ireland branch of Companies House has swiftly and dramatically increased – part of a broader pattern of apparently fraudulent activity that experts suggest may involve
- identity theft;
- VAT and corporation tax evasion; and
- opening business bank accounts to place high value orders with no intention of paying for them.
Of the 2,163 companies listed since the first of January:
- Over a quarter list officers who are also registered as living in China.
- 268 are registered to a single address in Belfast.
- At least 100 have nonsense names such as DSIFSXNVICXBNVJNX LIMITED, JFNXJVHJXNDJIC LIMITED, and JHFS JHVXJKVXK LIMITED.
Ease of incorporation is part of the reason the UK is an attractive place to start a business. By comparison:
- France requires a resident permit or EU citizenship, a social security number and a French address.
- Dubai requires a business plan, passport copies and proof of residency.
But concern about the scale of clearly fake or erroneous listings on Companies House is reaching a crescendo. This week MPs asked the Department for Business and Trade for more data on how foreign states are abusing Companies House, after it was revealed that a sanctioned Iranian oil firm was moving money through a series of UK-based shell companies.
Restaurants at risk. Another eye-catching example of abuse involves over 750 fake restaurant names that have appeared on the UK’s register of companies since the beginning of the year, often with minor changes to distinguish them from the original (for example 98 used the spelling restaurantt). Fake companies include “Dishoomm”, “Ottolenghii” and “Basilicoo”.
“This is deeply concerning,” says Daniel Morgenthau, co-owner of the Woodhead Restaurant Group, one of the businesses affected. “As a small business you work hard to build relationships of trust with your guests and suppliers alike… The current situation and ease with which bad actors can register fake entities, using fake identities, is scandalous.”
Dead directors. Tortoise tried to contact several of the thousands of people listed on Companies House as officers for the fake businesses. Two of the names which appeared on multiple listings were recently deceased. Another was in prison.
One restaurant chain has received bank cards in the name of a “clone company director”, suggesting a fraudulent bank account has already been created.
For Graham Barrow, an expert who investigates fraud on the Companies House register, it’s unsurprising. “I’m currently tracking real estate agencies, educational establishments, wholesale clothing retailers,” he says. “It’s rife. I’d say one in five companies listed has no commercial purpose whatsoever.”
A Companies House spokesperson said: “We are investigating these cases and are unable to comment further at this time. From March, we will have greater powers to query and remove fraudulent information from the companies register.”
What to do? Progress of the Economic Crime and Corporate Transparency Act through parliament has been painfully slow, but from March this year Companies House will have greater powers to query and remove fraudulent information. These include:
- enhanced verification checks for suspicious looking names
- cross-checking of data with other public and private sector bodies
- disapplying civil liability for firms that breach confidentiality when providing information to authorities combating economic crime
The headcount at Companies House is also increasing by 240 this year, and will reach 1,500 to 1,600 by the end of the reform program. Whatever they’re all doing, it is not due diligence.
Liam Byrne, Labour MP and Chair of the Business Select Committee, said the sums ministers are proposing for reform of Companies House are inadequate and will not allay concerns that loopholes remain: “At best we have half a plan to fix what is a full-scale international scandal,” he says.
Britain has acquired a reputation as “butler to the world” – a place where malign foreign actors can hide their wealth and evade sanctions, no questions asked. Certainly not by Companies House.
