SMEs are being urged to change the way they operate to help crack down on a new form of business ‘identity fraud’. Jonathan Hoffman, partner at AIM listed accountancy and business advisory firm Vantis, is urging SME owners to take a few moments to review the way that they submit information to Companies House, whose massive database holds information on almost 2 million UK businesses.

In the first seven months of this year there were 114 cases of attempts to change registered details at Companies House without consent. These cases would involve the appointment and resignation of Directors or the change in the company’s Registered Office. Companies House has no way of being able to authenticate the validity of signatures and the official forms lodged have no requirement for signatures to be witnessed or sworn.

According to Jonathan Hoffman, a partner at Vantis, “Corporate identity theft is now estimated to cost UK industry around £50 million per year. Most owner managers think that fraud is something that happens to other, larger businesses but this is a worrying trend for smaller companies”.

There have been recent cases of fraudsters logging themselves as company directors with Companies House to ensure that they establish themselves as legitimate if any identity checks are made. Another tactic involves falsely claiming to have bought a legitimate company with sound credit records and lulling suppliers into dealing with the alleged new owners. The fraudsters then sell the goods obtained before disappearing.

One of the most common techniques used is to fool Companies House into changing the Registered Office address or director’s details of an established business. Goods are then ordered for delivery to the ‘new’ address and by the time suppliers become aware that they have been defrauded; those involved have fled, leaving the company out of pocket. Another tactic involves a slight change to the registered name, obtaining goods or finance by persuading suppliers that the business is a branch or subsidiary of the legitimate company.

“There is a new emphasis now to encourage all registered companies to move to an electronic format to help reduce the threat,” continued Hoffman. “It is an ever present problem and one that is being taken increasingly seriously. This year the Metropolitan Police launched ‘Sterling’ a new economic crime strategy aimed at preventing wider identity fraud, 70% of which takes place in London costing each household approximately £1,600. While this highlights the scale of the problem companies can reduce the risk involved by a few simple procedures.”

Jonathan Hoffman offers some very simple advice to businesses looking to protect themselves from this form of crime.

· Regularly check your company details at Companies House to ensure that they are correct.
· Sign up for Companies House electronic filing, by which information is filed online with an electronic password. Companies House electronic customers can then subscribe to PROOF , the protected online filing service that reduces the possibility of fraud even further. PROOF customers tell Companies House that they will only file electronically, and that paper that claims to come from them should be rejected.
· Do not rely solely on Companies House records to determine whether to supply goods or offer services on credit.