Shift in Business Locations: One-Fifth of Companies Update Their Registered Addresses Due to Companies House Reforms
The Economic Crime and Corporate Transparency Act (ECCTA), set to enhance corporate transparency and combat economic crime, is fast approaching, but a significant number of UK company directors are yet to prepare. According to recent surveys, only about 28% of directors are ready for the changes, with none of the small businesses surveyed feeling fully prepared[1][3][5].
The potential consequences of non-compliance with the ECCTA are severe. Companies that fail to meet the new requirements may face unlimited fines, disqualification of company officers, restrictions on company activities, and the loss of business opportunities[1][5]. Under the new rules, larger firms will be held liable if their employees, subsidiaries, or agents commit fraud on their behalf, unless they can prove that 'reasonable procedures' were in place to prevent it[2][3].
The ECCTA introduces mandatory ID verification for all directors, persons of significant control (PSCs), and company filers. It also introduces a new offence - failure to prevent fraud - which makes firms criminally liable for employee fraud unless reasonable safeguards are in place, starting from September 2025[2][3].
To achieve compliance, companies should take several steps. Senior leadership must champion fraud prevention actively. A risk assessment should be conducted to identify potential fraud risks, and controls should be implemented that are proportional to the risk. Due diligence should be carried out to know who you are dealing with, and communication and training should ensure that staff understand policies. Regular monitoring and review of defenses are also essential[2].
Vistra's global director of entity management solutions, Meg Ogunsola, stated that many businesses underestimate the scale and urgency of the ECCTA and are taking a risky and short-sighted "wait and see" approach[6]. Ogunsola also warned that acting early is the smart move as millions are yet to complete ID checks, and bottlenecks are likely, which could disrupt business operations and leave firms exposed to severe financial penalties[7].
Despite the government's pause for small and medium enterprises (SMEs) in submitting more detailed financial accounts to Companies House, enforcement of key ECCTA measures, such as director ID verification and compliance with the provision to prevent failure, are on track to proceed[4].
References: [1] The Financial Times, "Businesses underestimate scale of economic crime reforms," 16th March 2023,
Companies that disregard the forthcoming Economic Crime and Corporate Transparency Act (ECCTA) face potential penalties such as unlimited fines, disqualification of company officers, restrictions on activities, and loss of business opportunities. Under the new rules, firms are criminally liable for employee fraud unless reasonable safeguards are in place, which include conducting a risk assessment, implementing proportionate controls, due diligence on business associates, staff training, and regular monitoring. Neglecting these actions could lead to bottlenecks, disrupted business operations, and severe financial penalties, as warned by Vistra's global director of entity management solutions, Meg Ogunsola. The enforcement of key ECCTA measures, like director ID verification and preventing failure, is Schedule to proceed despite the government's pause on submitting more detailed financial accounts for small and medium enterprises (SMEs).
