As the mandatory deadline for Identity verification approaches, up to seven million UK company directors are grappling with a new legal requirement.
Despite this large number of directors, fewer than 300,000 directors have completed these checks, leading to widespread confusion and concern throughout the business community.
Why Are So Many Businesses Facing Turmoil Over Identity Verification?
The introduction of mandatory identity verification is a provision under the Economic Crime and Corporate Transparency Act 2023. This provision aims to reduce money laundering and terrorist financing and boost trust in the UK economy by ensuring only verified individuals can start or run UK companies.
However, the way it has been carried out so far has left many company directors and persons with significant control (PSCs) confused. Companies House intends to raise awareness with a newly launched campaign, but many directors report that communication so far has been limited to email notifications. Business owners complain these messages are easily mistaken for spam, especially given the prevalence of online scams claiming to represent government agencies.
The unclear and unauthoritative source of information has fuelled uncertainty over the legitimacy and urgency of the ID verification requirement.
Why is the Verification Process Being Seen as Challenging for Businesses?
For many company directors, the process of verifying their identities is far from straightforward. Many are finding the series of step they have to follow to get their identities verified laborious and confusing, and some have abandoned their attempts altogether. Others have turned to Authorized Corporate Service Providers, which is a smart move but one that incurs additional costs.
Small business owners, including hoteliers and property managers, are frustrated because Companies House didn’t work with business and trade groups beforehand. They believe important information should have been shared through trusted sources like industry organizations or accountants to make sure it was genuine and reached everyone.
Some directors also describe the tone of Companies House communications as intimidating, heightening anxiety over the possibility of penalties for non-compliance. The confusion is heightened for businesspeople who receive official-looking emails instructing them to verify identities online, a scenario indistinguishable from typical phishing attempts targeting UK company directors.
What Can Be Expected When the Mandate Deadline Arrives?
As the deadline nears, Companies House and ACSPs are getting ready for a surge in verification requests. With millions of directors still left to complete the process, the volume of applications is going to flood the systems and support channels in the short term. It could lead to delays, technical issues, and increasing pressure on ACSPs that assist companies in becoming compliant.
Companies House has said that while the rollout would be phased over 12 months, hundreds of thousands of checks a day are expected to be attempted as the deadline gets closer. This may result in backlogs and stress for directors trying to meet requirements within a tight timeframe. Pressure on ACSPs to verify identities on behalf of clients is also expected to grow, which could increase the cost of services and delivery times.
Conclusion: Can Companies House Win Trust & Keep UK Business Moving?
Companies House stresses that the new process will be rolled out over 12 months and that not all the millions of directors need to comply at once. Nevertheless, uptake so far has been slow; if current trends continue, it could take years rather than months for full compliance. Officials maintain the initiative will enhance trust and support economic growth by clarifying who is actually running and controlling UK companies. Their advice: directors should act early and seek guidance if needed.
For now, the rollout remains mired in logistical and communication challenges. Clear, targeted information and accessible processes will be essential if Companies House hopes to win back the trust of the business community and ensure smooth compliance without disrupting the engine of UK enterprise.
