Registered Office Address (Rectification of Register) Regulations 2024

Debate between Lord Vaux of Harrowden and Lord Bourne of Aberystwyth

Monday 19th February 2024 Grand Committee

[Lord Bourne of Aberystwyth (Con)]

My Lords, I thank the Minister for setting out clearly and crisply the details of the four sets of regulations. I declare my interests as set out in the register. It is certainly not my aim to do otherwise than to support these regulations, which are consequential from the Economic Crime and Corporate Transparency Act 2023, as the Minister explained, but I want to raise some brief points in relation to them.

I appreciate that, in relation to the address of a company’s registered office, one major concern is companies opting for PO box addresses or inappropriate addresses that are not the address of the company or any of its officers. I take the point about the importance of tackling this, particularly in relation to crimes of fraud, money laundering and so on. Does the Minister have any idea of the incidence of this type of misleading activity? If he does not have the figures to hand, I would be grateful if he could write to me.

I have two brief additional points. More widely, I wonder if the Minister can provide any details—he has given some indication—of when other provisions of the Economic Crime and Corporate Transparency Act 2023 will be brought into force. I appreciate what he said about 4 March but I wonder whether Section 60 of that Act, on confirmation of lawful purpose, is to be brought in on that date. I think it is but would be grateful for an identification in the regulations and any other regulations expected in that regard. It would be good to have that mapped out.

Lastly, is the Minister in a position to say something about a review of company law more widely? The last far-reaching review of company law took place in 2006. It was then the most far-reaching review we have ever had and led to the longest piece of legislation on any subject ever seen at Westminster, so it would be quite a task, but that was some 20 years ago and it is in need of some review and refresh. When the Minister responds, perhaps he can give some indication of when that might be tackled. I am most grateful.

[Lord Vaux of Harrowden (CB)]

My Lords, it was good to hear that Companies House is making such good progress. I wonder if it might make sense for the Minister to arrange an update session at some point with Companies House for interested Peers, as we had during the process of the Economic Crime and Corporate Transparency Act.

I will speak briefly on the three rectification of register SIs. I greatly welcome these regulations. They will enable people whose address is being used without their permission as the registered or service address, or principal office, of a company to have that remedied. We heard during the passage of the Economic Crime and Corporate Transparency Act of the case of the unfortunate individual in Wales whose address had been fraudulently used to register 12,000 companies, and how hard it was for him to have that corrected. It must be deeply stressful for such an innocent party to worry about whether they will find themselves being chased by HMRC for unpaid VAT or tax, or indeed by other creditors, and possibly even finding the bailiffs at their door chasing payment for debts of companies that are nothing to do with them. Until now, they were getting little or no help from Companies House or HMRC in that situation, so it is good that action is being taken but I have a few questions to ask.

First, when Companies House decides to change the company address to the default address, it must in most cases give written notice to the company. I am curious how that will work in practice if the original address was fraudulent, or even just an error. The Committee will be able to see a bit of a circularity there. It presumably just means that the innocent party receives yet more mail addressed to a company that he knows nothing about, which might add to his stress. If it was a genuine mistake, the company might never find out until it was struck off, so there is a practical issue there.

More importantly, though, the regulations relate only to the single company in question. As we know, when a false address is used many companies—in the case of the man in Wales, thousands of them—may often be registered at the same address. It would surely make sense to include a duty on the registrar to investigate all other companies registered at the same address when the decision is taken to change the address to the default; otherwise, the innocent party whose home is being fraudulently used will have to make an individual application in respect of every company of which he becomes aware. In the case of the Welsh gentleman, that would be 12,000 individual applications, which would be an enormous and rather unfair burden on an innocent person. Can the Minister confirm that the registrar will investigate all companies registered at the same address, even if that is not an actual requirement under these regulations?

Related to that, the regulations are not clear about how an application for an address to be changed can be made. Does it have to be in writing or will Companies House make available a more user-friendly system—online, email or whatever—to minimise the effort that an innocent party has to make to sort out the matter? In most cases, I imagine that a fraudulent company will use the same address for the registered office, service address and principal place of business as relevant. Under these three SIs, the innocent party will in that case have to make three separate applications for each such company—or indeed more than three if for each individual director. That 12,000 could then turn into 36,000 or more applications to sort out the issue for our man in Wales. Can the Minister explain to me how this will be streamlined to minimise the burden on the innocent parties?

As I mentioned, such fraudulent companies are often used for the purpose of VAT fraud. Would it not make sense, therefore, also to include an obligation on the registrar to inform HMRC every time such a situation is found? During its evidence sessions, the Fraud Act 2006 and Digital Fraud Committee heard how it is common for fraud victims to check Companies House as a sensible due diligence step before parting with their money. If a company has been moved to a default address, would it not make sense to highlight that on the register and flag the company as being a fraud risk, during the period before it is struck off, to protect potential fraud victims?

Overall, these regulations are a good, important step but they could usefully be added to in order to provide better, simpler remedies for the innocent parties in these cases.