New Requirement for Accountants to Verify Directors’ Identities When Setting Up a Company in the UK

In 2025, Companies House is set to implement a major overhaul of its company registration process, introducing mandatory identity verification for directors, company secretaries, and individuals with significant control over a company (also known as Persons of Significant Control or PSCs). This change is designed to combat financial crime, increase corporate transparency, and align with international standards for anti-money laundering (AML) practices.

A key part of this new process will involve the use of Accredited Companies Service Providers (ACSPs) to assist with the identity verification of key individuals involved in the creation of a company. If you’re a business owner, accountant, or advisor, it’s crucial to understand what these changes entail and how the verification process will work.

What Are the New ID Verification Requirements?

From 2025, Companies House will require directors, company secretaries, and Persons of Significant Control (PSCs) to undergo identity verification before their details can be officially registered. The goal is to prevent the misuse of the UK’s company registration system for illegal activities such as money laundering, fraud, and tax evasion.

Individuals will be asked to submit government-issued documents—such as passports, driver’s licenses, or biometric residence permits—along with other personal information to confirm their identity. This step will ensure that only legitimate individuals are involved in the management and ownership of UK companies.

Why Are These Changes Happening?

The changes are part of the UK government’s efforts to tighten the regulations surrounding company formation and ownership. The aim is to:

Improve Transparency: The new rules will ensure that Companies House holds accurate and up-to-date information about the individuals behind companies, making it harder for criminals to hide behind corporate structures.
Combat Financial Crime: By verifying the identities of company directors and PSCs, the UK is taking a firm stance against money laundering, fraud, and tax evasion. These measures will make it more difficult for criminals to use shell companies to hide illicit activities.
Align with International Standards: The reforms bring the UK into line with international best practices set out by the Financial Action Task Force (FATF), which mandates rigorous checks to prevent the misuse of corporate structures for criminal purposes.

How Will the Verification Process Work?

The ID verification process will be largely digital, designed to be secure, efficient, and streamlined. Here’s a breakdown of how the process will unfold:

Online Submission:
Applicants will need to log in to their Companies House account and begin the verification process online. They’ll be asked to provide personal information and upload government-issued identity documents such as passports or driving licenses.
Identity Documents:
Companies House will require applicants to provide a combination of documents to prove their identity and address. These could include:
- A government-issued ID (passport, driving license, or biometric residence permit)
- Proof of address (utility bills, bank statements, etc.)
These documents will be checked against official records and databases to confirm their authenticity.
Verification via ACSPs:
One of the key aspects of the new process will be the involvement of Accredited Companies Service Providers (ACSPs). These ACSPs are third-party firms that are authorized by Companies House to carry out identity verification on behalf of business owners and directors.ACSPs will be responsible for checking the identity documents submitted by individuals and verifying them against government databases. These third-party providers may also help with the authentication of foreign identity documents, making it easier for non-UK residents to comply with the verification requirements.Why ACSPs?
- Expertise and Efficiency: ACSPs are trusted professionals with the expertise to handle identity verification efficiently. Their involvement ensures that the process is secure and thorough, minimizing the risk of fraud.
- Convenience for Clients: ACSPs can offer businesses a streamlined service, helping clients manage the verification process from start to finish. This could be particularly useful for companies with international directors or complex ownership structures.
- Cost and Time Savings: By using an accredited service provider, business owners can often speed up the verification process, avoiding potential delays that could arise from incomplete or incorrect documentation.
Final Approval by Companies House:
Once the identity verification is complete, Companies House will review the submitted documents and approve the registration if all checks are satisfactory. If any issues arise, such as discrepancies in the information or unverified documents, Companies House will notify the applicant and request further clarification.

How Can Businesses Prepare?

To prepare for the changes coming in 2025, business owners and directors should:

Gather Required Documents: Ensure all necessary documents—such as passports, driving licenses, or proof of address—are ready for submission.
Work with ACSPs: If you are unsure about the verification process or need assistance with foreign identity documents, consider working with an Accredited Companies Service Provider (ACSP) who can guide you through the process.
Stay Updated: Keep an eye on updates from Companies House regarding the final implementation of these changes, especially regarding any new guidelines or tools that might be introduced.

Conclusion

The new Companies House ID verification requirements, set to come into effect in 2025, are a significant step towards improving corporate transparency and tackling financial crime in the UK. By verifying the identities of directors, company secretaries, and Persons of Significant Control, the government aims to ensure that UK businesses are legitimate and trustworthy.

While the new process may cause slight delays and added costs, the involvement of Accredited Companies Service Providers (ACSPs) will help streamline the process, offering expertise and ensuring the checks are completed smoothly. For business owners and accountants, preparing in advance will be key to navigating these changes efficiently and ensuring compliance with the new regulations.