Companies House identity verification is now a legal requirement for UK company directors, and plenty of small business owners are still not sure whether it applies to them. It does. I have been a director of several companies over the years, so I have been through the process more than once and have opinions about it.
The short version is that you need to prove who you are, once, and then use your personal code every time you file something. The longer version is more interesting, because it shows how this government thinks about small companies.
What Companies House identity verification actually requires
Every director and Person with Significant Control now has to verify their identity. New directors have to do it before they are appointed. Existing directors get a transition period, and that window is closing, so please do not leave it to the last week.
You get a personal code once you are verified. You then give that code to whoever files on behalf of your company, whether that is you, your accountant or a formation agent. Without it, filings can get rejected.
The two ways to verify
The easy route is online through GOV.UK One Login. You scan a passport or photocard driving licence on your phone, do a quick face check and you are done in about ten minutes. I did mine sat in the motorhome on a campsite with one bar of signal, and it worked first time.
The other route is through an authorised corporate service provider, usually your accountant. This is handy if you do not have a valid photo ID or you simply do not fancy the app. They check your documents and verify you on your behalf.
Who needs to verify, and when
If you are a director of a limited company, you need to verify. If you own more than 25 percent of the shares or voting rights, you probably need to as well. Members of an LLP are covered too.
Here is where it gets fiddly. Plenty of founders are directors of several companies, and you only verify once, but you then have to make sure each company knows your code. Miss that step and a perfectly normal confirmation statement can bounce back.
What happens if you ignore it
Failing to verify is an offence, and it can mean fines and trouble with your filings. More practically, a company whose director has not verified can find itself unable to file accounts or appoint anyone new. That is a real problem if you are trying to close a funding round or sell the business.
Why the policy is mostly right
I will be fair here. Companies House used to be a bit of a joke. Anyone could register a company with a made up name and an address that turned out to be a launderette, and nobody checked.
That helped fraudsters, shell companies and people who wanted a respectable looking front for something shady. Legitimate founders paid the price too, because every dodgy company made banks and suppliers more suspicious of everyone. Tightening that up is overdue, and I would rather deal with ten minutes of ID checking than a register nobody trusts.
Where it falls short for small businesses
The principle is fine. The execution leans on the assumption that every director is a tidy person with a current passport, a smartphone and a lot of spare time. Real life is messier.
Think about older directors who have never used a smartphone for anything more than phone calls. Think about people with expired documents, or those who changed name. Think about the one person director of a tiny family company, who is now being asked to do the same bureaucracy as a listed firm.
There is also the cost. Using an accountant to verify you is not free, and for a micro business with thin margins it is another small tax on simply existing. It sits alongside the sort of pressures I covered in the employer National Insurance rise, where each individual change looks reasonable but the total weight lands on the smallest firms.
What I would do if I were you
Do not wait for a deadline email. Here is the checklist I give clients and friends.
- Verify yourself online with GOV.UK One Login while your passport is still in date.
- Write down your personal code and store it somewhere safe, such as your password manager.
- Check every company you are a director of, and make sure each one has your verified details linked.
- Tell your accountant or company secretary so your filings do not get stuck.
- If you have co directors or shareholders over 25 percent, nudge them to do the same.
That is about half an hour of effort for most people. It is not a big job, but it is exactly the sort of admin that gets forgotten until it blocks something important.
A security point nobody is talking about
Here is the bit that bothers me as someone who builds software for a living. We are now handing a lot of people a code that proves identity for company filings, and a lot of those people are not careful with it.
Expect phishing emails pretending to be Companies House and asking for your verification details. Treat your code like a password, never send it over email in plain text and only use official GOV.UK links. If you are tightening your business security more broadly, my piece on Cyber Essentials for small businesses is a good next step.
The bigger picture
I am generally in favour of rules that make the UK a harder place for crooks to hide. I am less keen on rules that are designed around the average large company and then dumped on a one person limited company without any thought for how it lands.
If the government wants a thriving small business sector, it needs to ask a simple question before every new requirement: what does this cost a founder with no staff and no finance team? I have made the same argument before in why UK small business policy keeps failing entrepreneurs, and I will keep making it until somebody in Westminster actually listens.
In the meantime, get yourself verified. It is quick, it is free if you do it online and it will save you a headache later. If you are running a limited company and thinking about what comes next, you might also like my book, The 28 Day Startup, which covers the unglamorous admin most founders only discover the hard way.
