It is now some months since the Economic Crime and Corporate Transparency Act 2025 was introduced, making it mandatory for company directors, persons with significant control (PSCs) and those who handle company filings to carry out ID checks at Companies House in order to continue their activities. Its purpose is to ensure Companies House maintains accurate records, reduce the likelihood of fraud and other economic crimes, and enhance corporate transparency.
So, what if this requirement is ignored or overlooked?
It is a shared frustration when faced with tedious tasks such as updating our information or needing to endure the process of resetting passwords, tasks which we all often put off for too long until they become absolutely necessary to complete. However, the requirement as set out above is not a task to be overlooked, as the potential consequences can be quite significant.
The more serious consequences for non-compliance of the verification requirements include Companies House issuing fines, disqualifying directors, or ultimately striking off the company.
Property-holding companies are particularly at risk of falling foul of this regime, as they frequently have limited other activity at Companies House which could potentially alert them to the problem. If a property-holding company is struck off this can be catastrophic, as that property immediately reverts to the Crown, under the process known as “Bona Vacantia”.
Once company assets pass to the Crown, recovery is extremely complex, expensive and, in some cases, impossible. To have any chance of recovery it is generally necessary to restore a company to the register, which is not straightforward.
Even if you are able to restore the company to the register, you will likely encounter other difficulties. For instance, you will have likely breached the terms of any mortgages outstanding against the company. In an instance where a director has personally guaranteed a loan, that lender can immediately call in the guaranteed debt from the director and issue proceedings for recovery.
If the company holds property under a lease, you will almost certainly be in breach of your lease terms, as most leases would list this as an act of insolvency. The landlord may forfeit the lease on this basis, may demand payment of rent to the end of the term and may utilise any deposit funds held towards this.
If a director has personally guaranteed the lease, the landlord may require that director to take a new lease in the same terms in its own name, but beware any provisions which were for the benefit of the original tenant only, which is common in break rights. Such rights can no longer be enjoyed by the new lessee.
Clients faced with this problem will often assume they can simply incorporate a new company with the same or similar name. But this does not fix the problem, as the assets once controlled by the original company may have already passed to the Crown, putting them out of your reach. Also, your company will have been referenced on legal documentation by its company number, which points straight to the dissolved company.
Additionally, any Mortgages will be filed against the dissolved company.
In short, DO NOT IGNORE COMMUNICATIONS FROM COMPANIES HOUSE!
Check your records are up to date, ensure your correspondence details remain correct and seek advice as early as possible to rectify a problem.