Why Companies House Identity Verification Matters — And How It Helps Protect Your Business

If you are a company director, you have no doubt been approached recently about verifying your identity. Before you next file at Companies House, you will be required to complete this verification using their online tools or an authorised service provider.

This is more than a procedural box to tick — it is part of the UK’s biggest corporate transparency overhaul in decades. And it has real implications for how safely you can trade.

At the Credit Protection Association (CPA), we welcome these changes because anything that reduces fraud, strengthens company data, and improves payment behaviour ultimately helps our members get paid on time.

What’s Changing at Companies House?

From 18 November, Companies House began rolling out mandatory identity verification for:

  • All company directors
  • People with significant control (PSCs)
  • Anyone who wants to form a new company

Directors must complete verification before they can act officially, and existing directors will need to verify within a transitional window.

Failure to verify may lead to:

  • Civil penalties
  • Criminal sanctions
  • Inability to act as a director

This is a significant shift from the old system, where very little validation took place and fraudulent incorporations could slip through easily.

Why This Matters to You as a Business Owner

1. It Reduces the Risk of Fraudulent Companies

Historically, it has been disturbingly easy for bad actors to register companies under false identities. These entities often took credit from honest suppliers, disappeared, and re-emerged under new names.

By verifying director identities, Companies House is closing that loophole and making repeat economic crime far harder.

2. It Strengthens the Data You Rely On

Most businesses check public company records before offering credit. But when director identities were unverified, the data could only be trusted up to a point.

Identity verification means:

  • More accurate director information
  • Clearer insight into who controls a business
  • Higher confidence in credit decisions

This makes CPA’s Creditcare reports even more powerful, as they integrate this reinforced data.

3. It Helps Prevent Phoenix Fraud

Phoenix fraud — where a company is closed with unpaid bills and a near-identical new company reappears — has long hurt UK suppliers.

With identities tied firmly to individuals, phoenixing becomes more visible and harder to abuse.

4. It Encourages Better Payment Behaviour

Many late payers hide behind opaque structures or “untraceable” directors. Once directors cannot act anonymously, accountability improves.

A verified director is far more likely to:

  • Respect agreed payment terms
  • Think twice before stretching suppliers
  • Avoid behaviour that could lead to sanctions

Anything that enhances accountability helps you get paid faster.

What You Should Do Next

This reform makes the UK business environment safer, but risk management remains essential. Now is the ideal time to ensure your credit processes are robust:

✔️ Check new customers thoroughly

Use CPA’s Creditcare reports to confirm you know exactly who you’re trading with — and what risks they carry.

✔️ Monitor existing customers

Our monitoring service alerts you to significant changes in your customers’ financial status so you’re not caught off guard.

✔️ Act early on overdue invoices

CPA’s Overdue Account Recovery service (included in your membership) resolves over 80% of late payments — and your customer pays you, not us, preserving your commercial relationship.

✔️ Escalate problem debts

For the minority who still won’t pay, CPA’s collection department can take matters further on your behalf.

A More Transparent Corporate Landscape Benefits Everyone

Identity verification is a major step towards cleaning up UK corporate behaviour. It protects honest directors, supports better decision-making, and helps create the fair trading culture that UK businesses deserve.

At CPA, we’ve been helping businesses navigate risk and get paid since 1914 — and these reforms only strengthen the tools we use to protect you.

Talk to CPA Today

If you are not a member yet and late payments are affecting your cash flow — or if you want to strengthen your credit control processes in light of these changes — we’re here to help.

Call ️ 020 8846 0000
Email nsm@cpa.co.uk