The Economic Crime and Corporate Transparency Act is continuing to introduce a number of changes that are impacting businesses on the UK's Companies House register to improve the accuracy and integrity of its data. The full range of changes can be viewed 'at a glance' here.

We have previously written about the increased powers at Companies House, and with the introduction of identity verification for anyone setting up, running, owning or controlling a company in the UK, we will take a closer look at what this means for the sector.

What are the changes?

The introduction of a new identity verification process is intended to help deter those wishing to use companies for illegal purposes and it is being introduced in a phased approach, which has already begun.

In April 2025, individuals were able to begin voluntarily verifying their identity. The process will become a legal requirement for all new directors and people with significant control of a business (PSCs), as well as for all existing directors and PSCs and anyone acting on behalf of a company.

Once identity verification has become compulsory for new directors and PSCs, there will be a 12-month window for existing directors and PSCs to comply. This means that by the end of 2026, Companies House will be able to begin compliance checks. By Spring 2026, any third parties that file on behalf of a company will need to be registered as an Authorised Corporate Service Provider (ACSP).

These steps will make it more difficult for fraudulent operators to use false names and addresses for their schemes.

How can individuals verify their identity?

Directors and PSCs can verify their identity directly through GOV.UK One Login and follow the verification process using ID documents. This can be a passport, UK photo driving licence, UK biometric residence permit or residence card, or a UK Frontier Worker permit. In addition, individuals will need to verify their current address and the year they moved in.

Alternatively, verification can be carried out through an ACSP. These are individuals or organisations that carry out anti-money laundering supervised activities, for example, solicitors, accountants, chartered secretaries and governance professionals.

ACSPs will also be known as authorised agents. These agents apply to Companies House and their checks will meet the same level of assurance as individuals who verify directly with Companies House. More information on this process is available here.

When individuals have successfully verified, they will receive a unique identifier known as a Companies House personal code. The code is personal to the individual, not the company. The code will be needed for various reasons, including to file a company's confirmation statement. More details are available here.

The risks of not complying with identity verification requirements include a financial penalty and being prohibited from making any filings for a company or starting a new company. 

The PCA's view

The PCA welcomes these new measures, which will support a crackdown on unscrupulous payroll suppliers. Nonetheless, Paul Newsham, CEO of Payroll Compliance Authority (PCA), reaffirms that sector regulation is as important as ever.

Paul, who is a Chartered Accountant of more than 20 years, says: "We welcome the push for identity verification, which is already underway. It will create a stumbling block for some umbrella companies that are acting fraudulently, for whom it has been far too easy to register and operate in a seemingly legitimate way using false names and addresses.

"Larger, more sophisticated operations are likely to find ways around these requirements, but this is where regulation will help. We look forward to seeing the details of the upcoming consultation on umbrella company regulation expected imminently, as announced in the government's Employment Rights Bill implementation roadmap.

"Nonetheless, the move towards cleaning up the Companies House register with greater checks and powers to remove inaccurate information can only help in the fight to halt the array of tax-avoidance schemes rife in the outsourced payroll sector."

The PCA will continue to monitor and remain in dialogue with the government on the road to regulation of the umbrella company sector, including in response to the upcoming consultation.