If you want to form a limited company but don't know how to do it you could use the services of a formation agent such as Companies Made Simple.
They'll create one for rates from £12.99 to £99.99 and it can be ready in just three hours.
They're one of the big players in this field, forming a company every two minutes - so far that's more than a million in total - and boasting: "We're trusted."
But is that trust misplaced?
This year I’ve exposed numerous cases of people being named as company directors without their consent, and having their addresses used as registered offices without their knowledge.
Stephen Fadian works in the financial services industry and, being aware of this scandal, decided to check Companies House records.
He was shocked to find his details used as the director of a company called Stephentho Limited, a mail order business according to its filings.
“There’s no one else with my first, middle and surname and month and year of birth, so it could only be me,” he said.
He has since got his name removed as the director but remains named as the sole shareholder and person with significant control, something that will require a court order to change.
Stephentho Ltd was formed by Companies Made Simple, which did not contact Mr Fadian before registering his details.
"The company formation agent in my view are not legally not doing anything wrong but morally they are abusing a gap in the legislation to profit," he said.
"They must know that a lot of the companies that they are setting up are without the knowledge or consent of people whose names are being given as directors, just from the volume of them.
"We are talking hundreds at the same registered office with the correspondence address for the director being the same as the registered office, rather than the personal address of the director.
"They are so many red flags they should be easy to spot.
"I would like to see the use of company formation agents stopped, outlawed.
"The lack of checks is the weakest link the chain of defence against money laundering and terrorist financing and formation agents are not necessary, the registration of a company is simple.
"If formation agents are not going to be outlawed they should be subject to the same licensing and regulatory framework as banks are in terms of anti-money laundering legislation.
"I'm a money laundering compliance officer for a financial services business, if I was to operate the same standards as them I would expect to face criminal action.
"They might say they have no statutory obligation to verify the information provided to them, but they know what's going on, anyone with any reasonable competence in this area would know that they are helping to establish fraudulent companies. If they do not know that they do not know their business."
Mr Fadian complained to Companies Made Simple and received a reply admitting that the customer who paid to have the company formed “failed to supply any documentation for the director” yet the company formation went ahead anyway.
Is this a commmon problem? To find out, we looked at six registered office addresses used by companies formed by Companies Made Simple. Because it incorporates so many of them, it was necessary to keep the research manageable so it was limited to companies formed in April, the same month as Stephentho Company Ltd, and registered at these six addresses. The criteria were narrowed down further by looking only at companies that changed their addresses soon afterwards. That made a total of 342 of them.
The address used to register Stephentho Company Ltd was in New Drum Street in central London. Many of the other companies registered there in April by Companies Made Simple follow the same bizarre styling by using the first name and part of the middle name of the supposed director for the company name - Stephenrich Company Ltd, Colinphil Company Ltd, Marktho Company Ltd.
Others have names that are meaningless jumbles of letters, such as Bgcd Company Ltd, Xzxzc Company Ltd and Hfbbc Company Ltd, which you might have thought would have prompted someone to question their authenticity.
At another registered office address used by Companies Made Simple, Little New Street in London, many of the new company names formed in April have strange repetitions of letters - Yoorkss Company Ltd, Catheee Company Ltd, Elizaamm Company Ltd.
At a third regular address, Leaders Way in Lutterworth, Leicester, the pattern of names is a weird non-existent word - Vordgher Company Ltd, Cadhder Company Ltd, Rtyrioer Company Ltd.
At a fourth address, Guild Road in London, the names are usually three letters followed by "Group", "United" or "Company", so we have XFX Group Ltd, XFX Company Ltd and XFX United Ltd.
Then there's Paul Street in central London, where the peculiar company names are composites of the names of the supposed director, so Jamhow Company Ltd has a director with the unlikely name of Jamie Howard Silver, and Camejho Company Ltd has the equally odd Cameron Jhon Hume named as the director.
Finally there's Braham Street, in London again, with a rash of names with similar styles, such as Lawrence Group of Companies Ltd, James Group of Companies Ltd and Sim Group of Companies Ltd.
The point is this: these patterns should have been easy to spot, and their similarities suggest that they've been set up by the same person or group of people, yet all the companies claim to have different directors.
There's something else they have in common. Shortly after being incorporated they changed their registered office address from one of the six mentioned here to a wide range of other addresses, presumably to make it harder to aggregate all the different companies to see how they are all connected.
At time of writing, 60 of the 342 companies at these addresses have had their registered office default to the Companies House address, which happens when the real residents complain that they know nothing about a company registered at their home.
I’ve found that some of the named directors had died before the companies were formed.
I can’t find any record of some others having ever existed, their strange names such as Felicity Citizen Bushell, Rachel Faul Conbridge and Cameron Jhon Hume appearing only at Companies House.
Some of the real people with details that match those of the directors are so concerned at how this might affect them that they do not want to be named.
“We do checks all the time when we take on new clients,” said one legal professional.
“It’s concerning that this is not being done when new companies are incorporated, anyone could search my name on Google and link me to this company.
“I’d probably be struck off if I did this.”
Companies Made Simple is part of the Moneypenny group, which last year made a gross profit of almost £36million. Its Wrexham HQ has been called Britain’s trendiest office, with a treehouse meeting room, pub and giant exotic pretend animals.
Chief executive Joanna Swash, 50, boasts: “We’ve never done anything the conventional way.”
The firm insists it carries out money-laundering due diligence on customers, including the 342 we investigated, and forwards data to Companies House “in good faith”.
"The formation process is entirely online and completed by the customer," it said.
"We carry out electronic verification and/or certification of government issued photo identification to verify the identity of all our customers. Unlike Formation Agents such as Made Simple, Companies House does not carry out any ID checks on individuals forming companies directly through its website.
"With regards to the address information and evidence provided by the customer, this is forwarded to and accepted by Companies House in good faith. Companies House currently has limited powers to query and remove any information which may appear inaccurate, fraudulent or suspicious on the public register.
"The Corporate Transparency and Registration Reform White Paper that was published at the end of February 2022 sets out the Government’s plans to reform Companies House’s role and proposes giving Companies House new discretionary powers to query, seek evidence for and remove and amend information on the public register. This is a change we support fully and have been campaigning for through the Accounting and Corporate Regulatory Authority for some time now.
“Should we receive concerns or complaints regarding the accuracy of information provided by customers, including the unauthorised use of an address, we have a rigorous process to ensure the matter is resolved."
In reply to Mr Fadian’s case, it said it reported the matter to the National Crime Agency and suspended the account using his details.
“While we acknowledge Mr Fadian’s issue with the process, these are caused by deficiencies in the Companies House process, not the practice of formation agents,” it added.
I asked if it could tell me how many other companies have been registered by the same person who registered Stephentho Company Ltd, what their names are and what action, if any, it has taken concerning them. I also asked to be told the nationality of the person registering these companies. Companies Made Simple would not answer, citing data protection rules.
I also picked a small selection of the 342 companies under the spotlight, just 15 of them, to give Companies Made Simple a fair chance to check its records. I asked if it had seen director identication documentation for these 15 companies.
It did not answer.
The mass of suspect companies formed by Companies Made Simple were unearthed by Graham Barrow, author of the podcast The Dark Money Files and an expert on corporate corruption.
“It is very hard to square the claim by Companies Made Simple that it carries out proper due diligence with the fact that, at a minimum, 342 companies were incorporated by them in the space of a month, using false credentials and in a manner which was clearly organised and connected,” he said.
“Those people who had their details wrongly used have to deal with the worry and distress when they find out that their name has been placed on the register without their permission.
“Proposed reform of Companies House will allow third-party corporate service providers to continue to perform checks on its behalf.
“That such an enormous number of companies can be formed in so short a space of time with apparently no meaningful checks significantly calls into doubt the proposed new regime.”
investigate@mirror.co.uk
