Companies (Directors’ Report) (Payment Reporting) Regulations 2025

Lord Sikka Excerpts

Wednesday 15th October 2025 Grand Committee

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, late payments are estimated to cost the UK economy close to £11 billion per year. Small businesses are the backbone of our economy, employing millions of people and enriching our lives. Late payments lead to 14,000 business closures each year—an average of 38 businesses per day.

The Government have already taken action to improve payment practices. In February, the new Fair Payment Code was launched, and we introduced secondary legislation requiring construction businesses to publish reports on their retention payment practices. In July, we launched a public consultation considering additional legislative measures to hold businesses to account on payment performance. This will go even further and will be the most significant legislation to tackle late payments in over 25 years and will give the UK the strongest legal framework on late payments in the G7.

These regulations will further increase transparency around the payment practices of large businesses, building on existing regulations that have already helped to improve payment times across the United Kingdom. We want to continue that trend by introducing payment data headlines into directors’ reports. Large companies are already under a duty to report biannually on their payment practices and performance. These regulations will require large companies to disclose payment reporting data within a directors’ report required under the Companies Act 2006, further increasing the transparency of payment performance to their boards, shareholders and auditors.

As a former business owner myself, I know all too well the importance of paying small businesses on time, and that is why I am proud that the Government are bringing forward these regulations as a means to tackle this issue and to support small businesses across this country.

I will now outline the key elements of this statutory instrument. These regulations amend Schedule 7 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 and introduce a requirement for large businesses to report information about their payment practices within their directors’ reports. The payment data headlines will include statements on payment practices, including the average time to pay, as well as the percentage and sum of payments made before 30 days, between 31 and 60 days, and after 60 days. It will also include the sum and proportion of payments that were not paid within the agreed payment period.

This data will publicly illustrate a company’s approach to payment. This is only a small ask for large businesses, which will help with the continuous improvement of payment times. The Government are committed to ensuring that this legislation continues to work, and this instrument will be subject to a review within five years. I hope that everyone present today can see the benefits that these regulations provide and agree with the introduction of this affirmative statutory instrument. I beg to move.

[Lord Sikka (Lab)]

My Lords, I thank the Minister for his introduction. I have a few questions for him, mainly because I have been unable to answer them for the businesses that have written to me about the statutory instrument.

First, can the Minister confirm that the payment practices disclosure regime—the PPRR—still remains in place, and that the directors’ report is an additional place where this information will need to be disclosed? If so, that means that SMEs will need to look in more than one place to find out what a particular large entity’s payment policy is. Would it not have been better to streamline the policy and have it all in one place? That would have at least reduced the search costs for businesses.

Secondly, this legislation appears to have a very limited scope. For example, it does not apply to the public sector. Do their SME creditors not matter? Do they not need to know the disclosures? The disclosures in the directors’ report regime do not seem to apply to medium-sized companies, which have thousands of SME creditors.

Thirdly, does this apply to LLPs? My reading of the SI appears to suggest that it does not. Private equity operates through limited liability partnerships, and some of those entities are larger than many of the large companies, yet they are not being required to disclose the payment policy either. Can the Minister clarify why the SME creditors of those entities should not be informed of the payment policies? The economic landscape is shifting and, in particular, private equity operating through LLPs is becoming more powerful. I hope that the Minister will not say that it would cost more to require medium-sized companies or LLPs to publish this information, because any business worth anything would already know the schedule and analysis of its creditors.

There is also an issue about who will check this. There is no check on the authenticity of disclosures. If the disclosures were in the notes to the annual accounts, external auditors would have to corroborate that information; in other words, they would need to verify whatever management has disclosed. However, the Government have chosen to put these disclosures in the directors’ report. The directors’ report is not explicitly subject to an audit, so anyone can dream up any number when they are analysing the age of the creditors and put it in the directors’ report—there is no way of knowing.

--- Later in debate ---

[Lord Leong (Lab)]

My Lords, I want to add to the point about enforcement that the noble Lord, Lord Sharpe, asked about. We have stepped up enforcement of these regulations and are currently writing to companies that we have identified as failing to comply with their reporting requirements. Out of the more than 500 companies contacted so far, over half have already returned to compliance or committed to do so. If necessary, we will take forward criminal prosecutions for non-compliant companies, which could result in an unlimited fine and criminal records for responsible company directors.

The noble Lord, Lord Fox, and my noble friend Lord Sikka asked about public procurement. Ministers from the Department for Business and Trade and the Cabinet Office have jointly written to government departments reminding them of their obligations to comply with the Procurement Act 2023, which compels public sector bodies to pay their suppliers within 30 days. It is vital that government leads by example. Government departments publish information about their payment performance in line with transparency requirements. The latest report shows that the Department for Business and Trade pays 96% of invoices within five days and 99% within 30 days.

The noble Lord, Lord Sharpe, asked what additional measures we are taking. As I said in my opening statement, we launched a public consultation in July 2025, including primary legislation measures that have not been consulted on previously. In this consultation we are proposing to increase the role that audit committees play in assuring payment performance data and to introduce measures to set maximum payment terms at 60 days without exception. Furthermore, we are consulting on the mandatory payment of interest-only invoices. We are also consulting on strengthening the Small Business Commissioner with additional powers to investigate poor payment practices and resolve late payment disputes. More importantly, we are also consulting on the practice of withholding retention payments, especially in the construction sector, to either prohibit the use of retentions or require firms to protect retentions from insolvency or non-payment. We will do more and are consulting to do more.

This Government are committed to tackling late payments. We want to make the UK the best place in the world for businesses. We believe that this legislation is an important step towards improving businesses’ payment practices and tackling the scourge of late payments. Small businesses are the backbone of the economy and as part of these regulations and the wider package of measures, we are delivering the biggest reform to payment regulations in 25 years. These regulations are just the first step in a wider package of measures that will be the most significant legislation to tackle late payments. I commend them to the Committee.

[Lord Sikka (Lab)]

My Lords, may I take a few moments to respond to a couple of things that have been said?

[Lord Fox (LD)]

The Minister has sat down.

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[Lord Sikka (Lab)]

I will be. A point was made about the auditors looking at the directors’ report. The law requires auditors to see that the directors’ report is consistent with the view given by the audited financial statements, but it does not require auditors to audit the directors’ report. There is a fundamental difference between examining and auditing. The Minister made a point about Companies House. Companies House is a giant filing box: it does not verify the contents of the financial statements, and no one at Companies House will be checking to see that the directors’ report has the information required by this statutory instrument.

[Lord Leong (Lab)]

I am afraid I disagree with my noble friend on the point about auditors. Auditors have to audit the entire company’s accounts and what is published in the directors’ report and form a view as to whether the directors’ report reflects what is happening in the company. On the point about Companies House, it is an enforcement agency and it has powers to enforce the law itself.

Limited Liability Partnerships (Application and Modification of Company Law) Regulations 2025

Lord Sikka Excerpts

Wednesday 10th September 2025 Grand Committee

These regulations are necessary to make the UK a safer and more transparent place to do business and I hope they will be welcomed.

[Lord Sikka (Lab)]

My Lords, I congratulate the Minister on retaining his position after the recent reshuffle of the Cabinet.

Despite recent reforms of Companies House, several issues remain unaddressed and the legislation in front of us does not really deal with them. I will illustrate my concerns with three pieces of empirical evidence. I can do more, but I do not have time.

The first concern is exemplified by a company called Herran Finance plc, which is company number 12370122 at Companies House. It was incorporated on 18 December 2019, with issued share capital, so its accounts claim, of £59,892,205. Its purpose is to provide financial services. This is a dormant company. It has never traded. The rudimentary accounts filed at Companies House show that it had cash in hand and at bank on 31 December of—guess what—£59,892,205. Amazingly, exactly the same amount was held a year later when the accounts for the following year were filed on 12 August 2022.

The company is engaged in banking, though it does not have the word “bank” in its name, which, as we know, is reserved for certain types of organisations. Its name does not appear on the FCA list of authorised firms. None of its directors is on the FCA list of authorised individuals. No person of significant control statement could be found at Companies House. The company’s page at Companies House noted on 10 October 2023:

“Compulsory strike-off action has been suspended”.


There has been no update since then. That is, nearly two years have elapsed.

This is a fake company that may have duped people. It actually has a website and its address is herran.co.uk, which has all the hallmarks of a scam. It describes itself as

“the 10th oldest bank in the country”

and says that deposits with it are safe because they are insured with the Federal Deposit Insurance Corporation —yes, a UK-based bank covered by US depositor protection. If anyone needed a sign of fraud, there it is. The website is an exact clone of a genuine bank.

Some five years after the incorporation of this organisation, no attempt has been made by Companies House to see that the accounts are genuine or that the company is licensed to carry out the described activities. Can the Minister explain who checks whether a fake bank has been incorporated at Companies House and how often these checks are made? Who are they reported to?

Directors of Herran provide a UK address but do not appear to live there. Companies House does not require proof of address when you first create a company. Anybody’s address can be used and, paradoxically, the injured party must provide evidence of the proof of address to correct data held at Companies House—but crooks do not have to. Can the Minister explain why no authentic proof of address is needed to register a company at Companies House?

Does the Minister agree that the filing of false information at Companies House should be a criminal offence? Why is that not already the case? What is the Government’s plan to deal with this? We have a lot of debates around immigration, but fake companies can be used to secure work visas. Can the Minister tell the House how many work visas have been secured by false companies? How do the Government know how many have been issued? Is there any check at any time? That is my first piece of evidence.

My second piece of evidence is that numerous fake banks are routinely registered at Companies House. Examples include “CITIC Limited”, “The Toronto Dominion Ltd”, “JPMorgan Chase Ltd” and “Goldman Sachs Finance Ltd”, and all these had a common director: a person named Barbarat Giuseppee, who claims to be an Italian living in France. The address given is probably non-existent, and the person probably does not exist either. The same Giuseppee currently holds seven company directorships according to Companies House. Yet nobody has bothered or cross-checked; nobody seems to be doing any job in tackling the crooks.

No amount of identity verification can confirm that a foreign national forming a UK company is genuine, as the UK does not have access to the passport or birth certificate databases of other countries. Even if a genuine foreign national is caught in illicit practices, UK law cannot be enforced on any person living in another country. Around 900,000 UK-registered companies do not have a UK director. Evidence shows that a company with only foreign directors is 17 times more likely to show signs of fraud, yet nobody has bothered to deal with this particular problem.

Genuine companies are not informed by Companies House or anybody else of the existence of fake companies abusing their name. As and when they discover this, they are left to incur legal costs out of their own pocket to fight fraudsters. Can the Minister explain why Companies House registers blatantly fake companies? Does he agree that we need a law requiring all UK-registered companies to have at least one UK citizen as a director? That way, at least we would know whom exactly to hold to account.

My third piece of evidence relates to a law firm that was shut down in October 2023. The name of the firm is Axiom Ince Ltd and it was closed by the Solicitors Regulation Authority. Some £64 million of clients’ money was missing. Unaudited accounts for the year to 31 March 2022 were filed at Companies House on 7 February 2023. They were not audited because directors claimed that the company was a small company. It was not, because it did not satisfy the requirements of the Companies Act definition.

An accountancy firm named Adrian C Mansbridge & Co. issued an accountants’ report and went along with the directors’ fiction—for a fee, of course. Subsequently, the Institute of Chartered Accountants in England and Wales fined the firm the puny sum of £2,100 and recovered the disciplinary costs of £2,200. The ICAEW keeps the fines to swell its coffers. The whole thing is a racket. Accountancy trade associations make money by licensing accountants and auditors and then profit again from their misdemeanours.

Companies House never checks accounts to see whether any of the audit exemptions claimed are appropriate. Can the Minister explain who checks to ensure that the accounting and auditing exemption requirements are not abused? He cannot say that it is up to the directors, because they are party to the wrongdoing, and he cannot say it is up to the auditors and accountants, because they are party to the wrongdoing as well.

So, currently, there is no central enforcer of company law, and the deregulatory zeal in political circles at the moment is unlikely to deliver the required transparency or freedom regarding economic crime, which is what the Minister said the legislation in front of us will deliver. I look forward to his response.

[Lord Vaux of Harrowden (CB)]

My Lords, I thank the Minister for introducing these regulations. It is good to hear from him on the progress Companies House is making in cleaning up the register and the process of verification, although, as the noble Lord, Lord Sikka, has just demonstrated so clearly, it is a work in progress.

The Register of People with Significant Control (Amendment) Regulations 2025 are fine so far as they go, but they still leave it far too easy for persons with significant control to disguise themselves and, therefore, not be disclosed on the register as they should be. We discussed this loophole at some length during the passing of what the noble Lord called the 2023 Act. It relates to the use of undisclosed nominee share- holders.

During the process of passing the Act, this House passed an amendment on Report that would have required shareholders holding 5% or more to declare whether they are holding those shares on behalf of another person. That amendment was ultimately dropped during ping-pong after a compromise was reached with the then Government that inserted into the Bill a power for the Secretary of State to regulate to strengthen the rules around nominees’ shareholdings.

A PSC has an obligation to state that they are a PSC, but a dishonest actor would not do so. The problem we have is that the onus on reporting PSCs falls to the company, and the obligations on the company under the statutory guidance are quite weak. The statutory guidance says that the company should simply scan its share register and identify any shareholders who hold 25% or more. It is easy therefore for a PSC who wishes to hide their identity to structure their holdings via a number of shareholdings below that 25% threshold. For example, five holdings at 20% would give 100% control.

All the dishonest actor has to do to hide that control is find five willing people who are prepared to have their name on the shareholder register and hold shares on behalf of the dishonest actor as nominees. There is no comeback for those nominees. They have no obligation to disclose the nominee arrangement unless the company actively asks them to, which it does not have to do if the shareholding is below 25%. So the company could quite legitimately say that it had followed the guidelines and state that it does not have a PSC because it could not see any shareholders above the 25% threshold.

A whole industry of nominee companies has grown up, as you can see if you google “nominee shareholders”. If the Minister has not done that, I urge him to take a look. Although there are perfectly reasonable uses for nominee shareholdings, it is fair to say that most of the nominee companies make it pretty clear on their websites that the primary purpose is simply to hide the beneficial ownership of the shareholding, which they will do for just £200 a year. Very few of them point out the PSC rules. Forcing those nominees to lie on the record to hide the identity of the beneficial owner would, at the very least, concentrate their minds and make it much harder for a dishonest PSC to find nominees prepared to hide their identity.

My questions for the Minister are as follows. What analysis have the Government done on this since the Act was passed? Does he recognise the issue? Is there any plan to use the powers that were inserted into the Act during ping-pong to deal with it?

Companies House: Filing of Annual Accounts by Small Companies

Lord Sikka Excerpts

Tuesday 8th July 2025 Lords Chamber

Asked by

[Lord Sikka]

To ask His Majesty’s Government what plans they have for implementing, modifying, or repealing any part of the Economic Crime and Corporate Transparency Act 2023 dealing with the filing of the annual accounts by small companies at Companies House.

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, this Government are committed to implementing the Economic Crime and Corporate Transparency Act 2023. The reforms in the Act aim to improve the accuracy of Companies House data, strengthening the UK’s reputation as a place where legitimate businesses can thrive while driving out dirty money. These changes aim to improve transparency and combat economic crime. The Government are engaging with stakeholders and Companies House to ensure effective implementation while minimising burdens on small businesses.

[Lord Sikka (Lab)]

My Lords, the secrecy afforded to small companies has incubated financial crime. Just last month, HMRC said that 40% of corporation tax due from small businesses is not being paid. Numerous money laundering, sanctions-busting and employment scams are fronted by small companies; therefore, we need far more information publicly filed by small companies at Companies House. So, further to his reply just now, can the Minister say that the Government will fully implement all the public filing requirements which apply to small companies under the Economic Crime and Corporate Transparency Act 2023?

[Lord Leong (Lab)]

My Lords, the reforms under the Economic Crime and Corporate Transparency Act 2023 represent the largest changes to the UK’s financial framework for registering companies in over 180 years. With the help of new powers, Companies House has already prevented some 14,600 suspicious filings and queried and removed false, misleading or incorrect information impacting some 106,000 companies. Furthermore, since the introduction of new data-sharing powers in March 2024, Companies House has shared approximately 800 intelligence reports with partners, who can use this to complement their own intelligence picture or take immediate action to disrupt illicit activities. We recognise recent concerns and will set up next steps to address specific concerns raised.

Pensioners: Shoplifting

Lord Sikka Excerpts

Thursday 15th May 2025 Lords Chamber

Asked by

[Lord Sikka]

To ask His Majesty’s Government what steps they are taking to address the reported increase in shoplifting by pensioners.

[The Minister of State, Home Office (Lord Hanson of Flint) (Lab)]

My Lords, all shop theft is unacceptable, and we are taking action to drive down retail crime. However, there is no official data to give an accurate assessment of the age of those who commit shop theft. Today—as we speak—the Home Office is once again hosting the Retail Crime Forum, which brings together representatives from the retail sector, security providers and law enforcement agencies.

[Lord Sikka (Lab)]

My Lords, poverty is a major cause of shoplifting. The full state pension of £11,973 is less than 50% of the minimum wage and is received by less than 30% of pensioners. Despite benefits, 2 million pensioners live in poverty, and over 100,000 a year die in fuel poverty. The loss of the winter fuel payment, unchecked profiteering and frozen income tax allowances will only worsen matters. The Minister has the power to reduce pensioner poverty by aligning the state pension with the living wage. When will he do that?

[Lord Hanson of Flint (Lab)]

The survey that has generated this Question was undertaken by one security firm, which found that only 5% of “pensioners” were undertaking shop theft. It defined “pensioners” as people aged over 50. It was complete, false nonsense, so before we go any further, let us just kill right now the argument that pensioners are a particular focus for shop theft. They are not. It is criminal organised gangs and that is where the Government are focused.

My noble friend mentioned a range of issues to do with challenges that pensioners face. We are protecting the poorest pensioners through the winter fuel allowance, ensuring that we can maintain the triple lock, and supporting pensioners generally. Even with all those measures, it is not acceptable for anybody to walk into a shop and steal something off the shelf, because that is a criminal act and it ensures costs go up for everybody else, including pensioners who obey the law. It is not acceptable, and I hope that we can focus in the Crime and Policing Bill on how we tackle shop theft as a whole.

Audit, Reporting and Governance Authority

Lord Sikka Excerpts

Monday 31st March 2025 Lords Chamber

[Lord Sikka (Lab)]

My Lords, it is fundamentally wrong that a body funded and populated by corporate and audit industry interests makes the rules which affect distribution of income and risks. Its cognitive capture means that Whitehall reforms are neglected. To take just one example, the audit partner of PwC spent just two hours on the audit of BHS. There are still no disclosures about the audit time budgets, composition of audit teams or lists of questions asked by auditors. Why is the Minister not willing to seek the immediate disclosure of these facts?

[Lord Leong (Lab)]

I thank my noble friend for the question. As we know, the UK has certain accounting standards, such as GAAP and the international financial reporting standards. These standards are non-mandatory. However, the Companies Act is very clear that a true and fair view of the accounts must be stated. That is a very high standard, but it is up to the individual or the committee of the company as to what should be reported in the accounts. This new Bill will set much higher standards for companies to abide by.

Respect Orders and Anti-social Behaviour

Lord Sikka Excerpts

Tuesday 3rd December 2024 Lords Chamber

[Lord Hanson of Flint (Lab)]

I am grateful to the noble and learned Lord for his question. I want to get to the exact wording correct. With the respect order particularly, it does not have to be criminal behaviour. It can be behaviour that potentially causes alarm, distress or harassment. Again, I say to the House that those matters will be tested as we go through Committee. There will be opportunities to clarify what that means and put down some legal guidelines during Committee in this House. The idea of the respect order is to tackle what I would term low-level anti-social behaviour. If criminal actions have been taken, criminal sanctions are available to police to make arrests accordingly. I hope we can reflect on that during Committee.

[Lord Sikka (Lab)]

My Lords, it will take more than an authoritarian approach to tackle anti-social behaviour. Public spaces for socialising and supporting people have shrunk as hundreds of youth clubs, community centres, libraries and adult education courses have completely disappeared. What is the Government’s programme for restoring such public spaces and creating a sense of community and belonging?

[Lord Hanson of Flint (Lab)]

This is extremely important. It goes slightly wider than my brief in the Home Office. We end up with the criminal justice end of the business. But my noble friend makes an extremely important point. It is important that we give support to communities through other government departments to address open spaces, play areas, youth clubs and other distractions. One of the other activities that the Government are undertaking is trying to invest in those areas over the next 12 months. But, specifically, my end of the business is when that does not work.