Criminal gangs have used the addresses of thousands of households without their knowledge to register phoney businesses.
Around 150,000 households had been registered, and in some neighborhoods, every single residence had been targeted.
The residents then faced overdrafts, loans, insurance obligations, and credit card bills.
A spokesperson for Companies House stated that there are now “no legal powers to check or confirm” a company’s information.
The majority of victims have been targeted by organized crime gangs with corporations registered at addresses across the entire United Kingdom.
The homeowners didn’t find out until Companies House, HMRC, and banks sent mail to the businesses.
“With intention”
On a single day, businesses were established at nearly all of the addresses on one street in Oldham.
They were all named after cleaning, building, constructing, or delivering, had a single director, and were all founded on May 27 of this year.
At the end of May, Kay and Ben, who live on the street, said they began receiving letters from various parties regarding a corporation at their home.
Kay stated that she had “called every one of them and informed them that this company is no longer located at this address,” but had not yet learned if the senders had altered the information.
She stated that she was instructed to report it to Companies House, but the agency informed her in a letter that people who had registered the company would have 28 days to complain before her address was removed.
“We’ve lived in this house since it was constructed, so we’re well aware that this is not a mistake,” she said.
This had been done on purpose.
One of their neighbors, who wished to remain nameless, disclosed that she had received correspondence regarding the registration of multiple businesses at her location.
“I had two letters from Inland Revenue, which I returned to the mailbox with ‘not at this address written on them, and four letters from Companies House,” she explained.
“Companies House made me fill out unnecessary paperwork, and I’m still waiting to hear back from them.
I emailed them a council tax bill and assumed it would suffice.
They kept arriving.
David, a resident of Oxford, was also targeted.
When he began receiving letters addressed to a name he did not recognize, he became concerned.
“We began returning them with the message ‘not known at this address,’ but they continued to arrive,” he claimed.
He stated that the company director listed in the letters subsequently received mail from Companies House and HMRC, as well as offers of bank accounts from financial institutions that had not conducted any checks for money laundering or fraud.
A search of the Companies House website revealed that his neighbors’ addresses had also been exploited without their knowledge to register fraudulent businesses.
David stated that he was “horrified” at the scope of the fraud, adding, “It appeared to me that Companies House’s guidelines would encourage a large number of these.”
He stated that Companies House must amend “their fundamental standards and verify the legality of a company’s registered address” and begin taking immediate action whenever an issue is detected.
The opposite way around
The registration of a corporation is a basic process, as it costs £12 and takes approximately 20 minutes.
Typically, the firm can begin operations within 24 hours, and there are no checks to determine who registered it.
Graham Barrow, a specialist on financial crime, stated that it was “very difficult to express how serious and massive this situation is.”
He estimates that roughly one-fifth of the corporations established in the United Kingdom in the past year were bogus.
They all have one characteristic: they have no economic value.
He stated that they were set up to defraud banks or government entities such as HMRC, leaving unsuspecting householders with unexpectedly high costs.
“It is a prevalent misconception that Companies House is some sort of regulated government agency,” he explained.
“It is a registration that was established in 1844 to be a registry of firms, and it has no authority to verify any of the information.”
He described the existing system as “madness” and “totally backward.”
“It should be checked upon entry, not departure.
“I know it’s only £12 [to register], but it takes a lot of time and effort, and people don’t do it for their health; they do it for a very specific and criminal purpose.
Companies House conducts inspections to guarantee the completeness of filings, but “at present, the Registrar of Companies has no legal authority to evaluate or confirm the information submitted to her.”
“The Registrar must register a document if it appears to meet the requirements for proper delivery,” he stated.
He stated that Companies House was aware of the misuse of the registry and “recognizes the hardships faced by people affected by this.”
“When criminal behavior is suspected, Companies House works closely with law enforcement agencies to refer cases and facilitate investigations,” he said.
He said that the government had recently consulted on “substantially expanding the role and powers of the Registrar” and “issued a White Paper proposing measures” to combat this type of abuse.
“Together, they will considerably enhance the Registrar’s ability to identify who is forming and running companies and will enable her to question information companies submit her if she has cause to suspect it is suspicious, misleading, or fraudulent,” he said.
