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Police involved in Companies House filing fraud
The Metropolitan Police in the UK are investigating a false set of company accounts filed at Companies House. The investigation is proceeding on the basis that the filing may have been intended to deliberately damage the victim business. The accounts, which were signed off by a bogus company director, stated the company had an £800,000 operating loss and severe cash flow difficulties, alongside a note stating it was likely a Receiver would be appointed shortly.
The development follows concerns over the fraudulent use of director's identities to set up bogus companies and to subsequently attempt to de-fraud others. In the past, fraudsters have also submitted fictitious accounts to Companies House that show a very good financial position. Using the subsequent good credit rating, the bogus company then goes on to commit fraud, obtaining credit to purchase goods and services. This form of fraud is estimated to cost £50 million a year to industry.
Companies House are encouraging businesses to take up the online filing system, known as PROOF, which has been designed to give companies control of their filing. Using this system, companies can only change their details online using a password, a confidential authentication code and a registered email address. These security measures make it significantly more difficult for fraudsters to commit fraud.
However, there have been instances recently where Companies House customers have been contacted by someone claiming to be from Companies House, asking for verification of their WebFiling Authentication Codes. Obviously, the majority of firms would not hand such information out, but if you are a small business under pressure and someone calls offering help, sometimes firms will accept this help and may live to regret it later.
Fraudster's are also believed to have stolen the identity of accountants in order to legitimise a set of manufactured accounts, which are then filed at Companies House, in order to add a further level of respectability to what is, in reality, an empty shell company. Although credit agencies are aware of this practice and are now more likely to contact accountants in order to verify the accounts they have signed off, this process still tends to be ad-hoc.
At the moment, the only consolation for the accountant is that although they will be concerned by the theft of their identity, and will inevitably be asked to prove their lack of involvement with the fraudulent company, it is highly unlikely that they will ultimately be held liable. The loss will ultimately fall upon the company that offered credit to the fraudulent company based on the strength of its financial statements.
Companies House have confirmed that Companies House personnel will never contact businesses by telephone to try to ascertain the WebFiling Authentication Codes. Should anyone be contacted by someone claiming to be from Companies House, they should try to obtain a return telephone number and should immediately contact Companies House.
As well as providing a range of credit reports and Companies House documents, creditgate.com also offers a free email "monitoring alert" service, which automatically alerts companies of any changes at Companies House to their company's details, including director changes, allowing companies to act quickly in the event of possible ID theft.
About the Author: Phil Smith is the managing director of creditgate, one of the UKs leading and fastest growing online providers of business credit and company information. Before setting up creditgate.com two years ago, Phil was previously employed for over 20 years within the insolvency department of Pricewaterhousecoopers.