The Government has been accused of a “dereliction of duty” after blocking a bid by Labour to raise the cost of setting up a company in the UK.
The opposition had proposed increasing the fee charged by Companies House for registering a new business to £100 as part of a series of measures to tackle economic crime.
The fee is currently £12, which anti-corruption campaigners argue is too low to deter criminals from setting up fake companies and will not provide Companies House with enough resources for enforcement work.
Proposing the amendment to the Economic Crime and Corporate Transparency Bill on Tuesday, shadow minister Stephen Kinnock said: “It has been abundantly clear for quite some time now that the fees charged for registration are ludicrously low.
“The minister is quite aware of the undeniable fact that at this point it is simply too cheap, too quick and too easy to form a new company in the UK with minimal to non-existent verification or oversight.”
In failing to accept this practical amendment, the Government is guilty of another serious dereliction of duty, having chosen to continue kicking the can down the road while crooks and kleptocrats exploit our financial system— Dame Margaret Hodge, Labour MP
Increasing the registration fee to £100 was proposed by the Treasury Committee in February this year, with MPs claiming it would raise £80 million while not deterring “genuine entrepreneurs” from setting up companies.
Business minister Kevin Hollinrake has previously spoken in favour of increasing Companies House fees to at least £50 to fund better enforcement against economic crime, but on Tuesday said the exact level of fees would be decided later.
He said: “We don’t put the cart before the horse. Companies House need to set out exactly what resources they will need, what staffing they will need, what IT implementation they will need, to do the job.
“They will present that to Beis and say this is what we need to do and then fees will be set on a commensurate basis.”
Labour MP Dame Margaret Hodge, who chairs the All-Party Parliamentary Group on Anti-Corruption and Responsible Tax, criticised the Government’s decision to put off increasing fees.
She said: “In failing to accept this practical amendment, the Government is guilty of another serious dereliction of duty, having chosen to continue kicking the can down the road while crooks and kleptocrats exploit our financial system.
“All our major allies have higher fees to set up a company and yet it doesn’t seem to have harmed their growth. Let’s be honest, if you don’t have £100 to set up a company, then what kind of business are you trying to start?
“While I welcome the new powers the Bill has given Companies House to fight economic crime, these will be worthless without also providing the resources to use them. During a cost-of-living crisis, why should the taxpayer foot the bill, when Companies House alone could raise millions simply by bringing fees closer in line with our neighbours?”
Companies House fees are still set to increase as it is given more responsibility for combating economic crime, and Mr Hollinrake said the new amounts would be set out “shortly”.
He added: “We all agree that Companies House and the other enforcement agencies should have enough money to do the job. That’s what we are trying to get to, and that’s what I think we will get to.”
