New powers granted to Companies House have resulted in a dramatic 30 per cent fall in weekly company registrations across the United Kingdom. The decline follows the introduction of mandatory identity checks for directors, a key measure designed to clamp down on economic crime.
New Verification Powers Take Effect
As of 18 November 2025, a fresh legal requirement compelled all company directors to verify their identity with Companies House. This forms a central part of the agency's enhanced powers under the Economic Crime and Corporate Transparency Act. Failure to comply carries enforcement risks, including financial penalties, referral to the Insolvency Service, or potential prosecution.
Small Business Minister Blair McDougall championed the move, stating that reliable register data allows businesses to make better-informed decisions about partnerships. The powers enable Companies House to adopt a "proportionate approach to enforcement" in its fight against fraudulent incorporations.
A Dramatic Drop in New Companies
Data analysed by The Times reveals the immediate impact of the legislation. Weekly company incorporations plummeted from 18,199 in the week before the rules began to fewer than 13,000 in each of the five subsequent weeks leading up to Christmas. This represents a drop of approximately 30 per cent.
Graham Barrow, a specialist in corporate filings and financial fraud, told the newspaper: "I expected a significant drop, and 30 per cent or so is certainly that. It’s long overdue. The level of company incorporations has included a lot of crap for far too long." He affirmed that the legislation appears to have been impactful.
Persistent Challenges and Evolving Tactics
Despite the positive shift, experts warn that the problem is not eradicated. Barrow noted signs that tactics are changing among those seeking to abuse the corporate register. One emerging issue is the rise of "paid-for proxy directors," individuals who sell their verified identities to mask the true operators of companies.
Furthermore, the current legislation does not address the use of fake addresses, leaving another potential loophole. The crackdown continues against a backdrop of a vast register; by the end of September, there were 5.5 million companies listed, with over 500,000 in the process of dissolution or liquidation.
This follows a coordinated summer crackdown where over 11,000 businesses were struck off the register for suspected links to fraud and money laundering. Companies House has set an ambitious goal in its five-year strategy: to become a trusted guardian of corporate transparency and a catalyst for economic growth by 2030, while protecting businesses and the public from harm.
