By Lars Mucklejohn
Hundreds of “erroneous” filings made at Companies House have raised fears over a sophisticated fraud targeted at banks and other financial institutions as the government faces criticism for the register’s lack of funding and checks on false information.
The issue stems from around 800 forms on the settlement of debts submitted on 190 companies at the government-owned corporate register, all apparently made from the same account.
The forms, called MR04s, appear to show that firms borrowing money had been released from charges that entitled the lender to repossess their property, known as collateral if they did not repay.
Trade body UK Finance last week issued an “urgent” notice to its members, which include the UK’s biggest banks and other financial institutions, saying the forms were “erroneous”.
The first of the relevant filings was registered on 1 February, with the majority dated between 15 February and 22 February.
A list circulated by UK Finance to its members, seen by City A.M., showed a seemingly random series of affected organisations ranging from hospitality groups and banks to utility firms and an arts charity.
Big names include Australian asset manager Macquarie, supermarket Sainsbury’s, Lloyds-owned Bank of Scotland, the European arm of investment bank RBC, estate agent Knight Frank, restaurants Ask and Zizzi, and Nero Coffee Roasting.
Some of the organisations were affected by dozens of the “erroneous” filings.
Sainsbury’s saw 14 charges registered as “satisfied” by the account, with one relating to a “supplemental trust deed” created in 1969. All these forms list the “entitled” party as a firm that was incorporated in 1902 and has been dormant since at least 2018.
Bank of Scotland received 25 of the “erroneous” forms, while RBC Europe saw 38 related to charges dating back to 1984.
Banks named as “entitled” parties on the forms include Barclays, Natwest-owned Royal Bank of Scotland, Morgan Stanley, Citibank, Deutsche Bank’s London branch and RBC Europe. One of the forms filed on Bank of Scotland named “The Governor and Company of the Bank of England”.
There is no suggestion of wrongdoing by any of the groups affected.
Companies House has flagged that incorrect filings saying a charge has been satisfied do not invalidate or cancel the charge, meaning it is still valid and enforceable by the lender.
The source, scale and motivation of the filings remain unclear. All the forms seen by City A.M. were “delivered” by an individual using an address in Northern Ireland who could not be reached for comment on Tuesday. It is not clear whether the individual’s name has been used in error.
The forms state they have been authorised by “a person with an interest in the registration of the charge”.
Companies House has blocked the account responsible for the forms and said on Monday that it would remove the filings. It declined to comment further on Tuesday. The filings remain accessible online.
Fake names and new powers
Factually incorrect information on Companies House is not uncommon. Campaigners have long called on the government to crack down on hundreds of “shell companies” on the register which have been involved in fraud and money laundering.
The government has responded by granting Companies House new powers to stop scammers, which came into force on Monday. Companies House and the business department said they had prioritised “cleansing the register to remove details of those appointed without consent”.
Under the Economic Crime and Corporate Transparency Act 2023, there will be a requirement for a company to maintain an email address that Companies House can use to communicate with it.
It is also set to receive a funding boost from higher fees, with the cost of registering a company rising to £50 from 1 May.
Companies House had previously allowed people to use a PO Box as their registered address, meaning fraudsters could use UK residents’ details to register companies without their knowledge.
Last year, HMRC said that it found “no evidence of fraud” in a case where a Cardiff flat owner got tax bills for 11,000 Chinese companies registered at his address.
The names “Jesus Christ”, “Donald Duck”, “Judas Superadio Iskariot”, and “Adolf Tooth Fairy Hitler” have previously been listed as active directors of UK companies on the register.
“The source and motivation for this attack remains to be identified. However, the capability behind the falsification of liability and security records at Companies House on such a scale signifies the level and breadth of the threat to which the public and banks are increasingly exposed,” Michael Barnett, a partner at Quillon Law, told City A.M.
“It is crucial that Companies House improves its systems and safeguards to prevent and identify fraud on this scale.”
Kate Gee, a partner and commercial fraud specialist at Signature Litigation, said: “It is fitting that these ‘rogue’ filings coincide with the phased roll out of Companies House’s new powers to tackle fraud, set in motion on Monday. The new powers aim to ‘improve the quality and reliability of its data and tackle misuse of the companies register’ – and are evidently overdue.
“With the new powers, it remains to be seen whether Companies House has sufficient funds and human resources to do what is needed to correct the register, prevent future offences and maintain a reliable and accurate record of company data.”
