The UK compliance landscape is undergoing a necessary change. The critical new powers inherited by Companies House through the Economic Crime and Corporate Transparency Act 2023 mandate that identity verification is now a legal requirement for all new company directors and Persons with Significant Control (PSCs) on the register appointed on or after 18 November 2025.

We have previously written about why identity verification will support compliance in the umbrella company market. The ambiguity around director's names has long helped to shield fraudulent activity in the sector, now there is an additional compliance step that individuals must take to remain on the register.

The new law explained

Identity verification is designed to reduce fraud and improve transparency across the UK register, which includes more than 5 million registered companies with over 5,000 companies incorporated each year. The process, which began voluntarily in April 2025, has now become a statutory requirement. More than a million people verified their identity before it became law.

The new measure ensures greater transparency from the ground up, effectively raising the barrier to entry for rogue operators. While new appointments must comply immediately, existing directors and PSCs now have a 12-month window to complete the process, meaning verification must be completed by the end of 2026. Furthermore, by Spring 2026, any third parties filing documentation on behalf of a company must register as an Authorized Corporate Service Provider (ACSP).

Individuals can verify their identity directly via GOV.UK One Login using a passport or photo driving license, or through an ACSP such as accountants or solicitors. These ASCPs must meet the same level of assurance as those conducted directly by Companies House.

Failure to comply constitutes a legal offence and will result in a financial penalty. Non-verified individuals will be legally prohibited from making any filings for their company or starting a new company.  A director or PSC who continues to act without verifying their identity risks disqualification from holding office.

Historical abuse and the need for change

These changes directly tackle corporate abuse. Before identity verification, directors and PSCs could obscure ownership by using false names or providing intentionally misleading details. With verification, combined with other new rules, such as the prohibition of PO box addresses as of 4 March 2024, criminal enterprises will find it harder to operate.

How is Companies House strengthening the corporate register?

Identity verification is only one of the ways that Companies House is reforming the register's accuracy and reliability.

With its new powers, Companies House can now query or reject filings if the information provided is incomplete, inaccurate, or misleading, and can ask for changes to be made before accepting records. It can also remove false and incorrect entries more quickly than before, often without needing an external complaint.

Furthermore, when a new company is formed, it must confirm that it is being created for a lawful purpose, a statement that must be repeated in annual filings. Compliance is reinforced through financial penalties, annotations on the register, and company strike-off action. Dedicated teams are working with law enforcement to identify and address these issues early.

The initial reforms have already delivered significant results. False or misleading information affecting 100,400 companies was queried and removed between March 2024 and March 2025. Targeted investigations resulted in the removal of 965 companies and 2,895 fraudulent appointments. False entries have been removed across 82,600 registered office addresses - 66,900 of which officer addresses, and 55,1000 PSC addresses.

The PCA supports these steps, which will make it harder for unscrupulous umbrella companies to register and operate using false details.

Companies House's strategic vision

The identity verification drive is central to Companies House's new five-year strategy (2025-2030), which plans to transform the UK's registrar of companies into a more active gatekeeper over its data. By leveraging the powers contained in the Economic Crime and Corporate Transparency Act 2023 and collaborating with partners, Companies House aims to promote a transparent and accountable business environment and strengthen economic confidence.

CEO Andy King makes the organisation's ambition clear: "By 2030, we want to be known as the trusted guardian of corporate transparency. That means when someone looks up a UK company anywhere in the world, they can be confident the information they're seeing is accurate, up-to-date, and reliable."

The PCA's view

While the PCA sees identity verification as an essential step, we acknowledge its limits when tackling sophisticated financial crime. Identity verification confirms who you are, but not how you operate financially.

PCA CEO Paul Newsham has cautioned: "Larger, more sophisticated operations are likely to find ways around these requirements and thorough due diligence will, of course, continue to be as important as ever when researching and engaging the services of an umbrella company. Checking through details on Companies House is just one small part of this process but every nut and bolt that is tightened against fraudulent players is a step in the right direction.

"Upcoming legislation cracking down on PAYE accountability will also play a key role in helping to cut out rogue operators from the supply chain."

The PCA provides unequivocal third-party assurance of an umbrella company's legitimacy through a triple-audit approach (more on this here), and puts integrity before profit.

If you would like any further information or have any questions about PCA membership or the audit process, please contact Paul Newsham at paul@payrollcomplianceauthority.co.uk