The letter from Companies House began “Congratulations on becoming a director”.
Which was news to Emma Dailey, who has lived in her flat for 12 years and is certain it is not home to any company directors.
Similar letters have been dropping through the letter boxes of all seven flats in Miller Lodge in Rainham, Essex, bemusing and worrying the residents. The flats in this one small residential block have been used as the registered office addresses of 15 companies incorporated between September 6 and 9.
It is just one example of a scandal that is afflicting people across the country as their names or addresses get used without their permission to set up companies.
In Emma’s case, her flat has become the registered office for a company called Claxton Barbing Limited.
Its stated business purpose is hairdressing, so the strange word “Barbing” is probably a misspelling of “barbers” by someone with poor English.
“When I rang Companies House to ask how I get my address removed they said I had to supply documents to prove I live here,” she said. “Yet when it came to someone using my address in the first place they said they take it on good faith.”
After Claxton Barbing was incorporated, Emma received a letter from a bank offering her the chance to open a business account.
"Apply online in minutes," it read. “Over 70% of applications are approved within 24 hours."
Which might help explain the flood of fake companies – they can easily get business loans and disappear with the money, leaving people like Emma to face the fallout.
Another innocent person who could suffer the consequences is 84-year-old Harry Claxton, who knew nothing about Claxton Barbing until I told him that his details are being used as its director, along with a false correspondence address so that he never received any notification from Companies House.
“It’s amazing to learn how easy it is to register a company with Companies House using false information,” he said.
“When I set up a limited company some 50 years ago I had to provide documents to prove my identity which were checked for authenticity.”
The government has promised a shake-up of Companies House in the proposed Economic Crime and Corporate Transparency Bill.
Business Secretary Jacob Rees-Mogg says it will stop “fraudsters misusing the identities of innocent people , or corrupt elites attempting to disguise their dodgy dealings.”
Companies House Chief Executive Louise Smyth said: "If agreed, these changes will allow us to actively improve and maintain the integrity of the register like never before; inspire greater trust in our data, crack down on economic crime and further drive confidence in the UK economy."
I'm not sure why she thinks there's any trust at all in the company register as it now exists, anyone can file whatever name and address they like without ID verification, as this next lot of shams prove.
Every new company has to state what sort of business it will be conducting by giving a Standard Industrial Classification or SIC code. One bunch of new companies have listed two SIC codes, 41202 and 46240, and a very odd pairing they are.
These mean, if we are to believe them, that they are in the business of constructing domestic buildings, and also the wholesale of fruit and vegetables.
This unlikely combination is made all the stranger by the fact that 21 such companies have been registered within a few days to a small block of flats in Coventry.
Valentin Marin and his wife Zoe are each the director of one genuine company and say they know nothing about all the others incorporated since August 6 at their address.
“I got back from holiday and suddenly there was all this post about companies I’ve never heard of,” said Valentin.
“I’ve got a company and so has my wife, apart from these two all the others listed at my address are false.”
The fake companies end with the same word, “Service”, with some spelled with an extra “e”.
So, for instance, there’s Parker Servicee Limited, Webb Servicee Limited, and Wright Servicee Limited. Again, this could be down to bad spelling by someone from overseas. Another possibility is that the strange spelling is deliberate. Crooks setting up fake companies en masse do not want them rejected because another company already has their chosen name. Name-clash is much less likely if you're using made-up words.
This same odd spelling crops up among new companies using a terraced house in the Bearwood area of Birmingham as their registered office.
There’s Cook Servicee Limited, McCarthy Servicee Limited, Douglas Servicee Limited, and even one called Wright Serviceee Limited and another called Patrick Serviceeee Limited.
Despite 30 companies using the address, the young mother who lives there told me: “I don’t know anything about any companies.”
They have also listed their business purposes as house building and wholesale fruit and veg sales. The crooks setting them up don’t care how implausible this sounds, or how noticeable the bad spelling might be, they know no one at Companies House is going to check.
Whistleblower Kevin Brewer believes he is the only person to have been prosecuted for filing false information to Companies House.
He ran a company formation business and decided to expose flaws in the system by incorporating two companies using the names of real people without their permission.
He chose the name of Baroness Neville-Rolfe, the minister responsible for Companies House at the time, and the then Business Secretary Vince Cable, whose changes enabled anyone anywhere in the world with a computer to incorporate a company in the UK with no ID vetting.
Mr Brewer then told both politicians what he’d done, and as a result was prosecuted and ordered to pay almost £12,000 in fines and costs. “As each day goes by more bogus companies are being set up, urgent action is needed,” he said this week, longing for the days when company incorporations were carried out by professionals who carried out due diligence on their clients.
“That changed when Vince Cable opened up the registry for anyone to file documents and form companies for only £12, leading to a slew of bogus companies and fraud.
“It is the public who suffer having their names and addresses used by crooks and then left holding the baby.”
I’ve asked Companies House if anyone else other than Mr Brewer has been prosecuted for filing fake details but have not had an answer.
Money laundering authority Graham Barrow calls the chronic failures at Companies House “a scandal of monumental proportions”.
“No one is immune from having their name or address used illegally and repeatedly,” he said.
“Ordinary people’s lives are being turned upside down by finding their home has been used to incorporate a company operated by criminals.”
An expert at spotting dodgy new companies, he tweeted this week: “At just four addresses in Leeds postcodes LS7 and LS8, 75 companies have been registered containing the word “cleaning”.
“Which is odd, as all of them have SIC code 45112 – for sale of used cars and light motor vehicles.
“What are the chances of that?”
Some of the companies have odd spellings and the named directors, who I assume know nothing about them, are often well past retirement age, so Steventon Cleaningg (sic) Limited has a director aged 91.
Mr Barrow welcomed the Companies House reforms, but added: “I fear for the timescales involved in implementation.”
It's also worth asking how Companies House plans to check the IDs of foreign nationals who are living abroad, and how much good this will do anyway. If a company collapses owing loads of money and the only registered directors live in, say, China, how is anyone supposed to take legal action against them?
The chief executive of the banking trade body UK Finance has warned about the harm being done by fake companies.
"It’s clear that the ease by which a company can be set up is open to abuse," said David Postings.
"Abuse of the system is a significant enabler of high-volume fraud and money laundering by corrupt oligarchs and organised criminals.
"Companies House should be given more powers, beyond those in the recent White Paper, to proactively look into suspicious registered companies, alongside putting in place much better verification processes to know who sits behind corporate structures."
Another well-informed voice in this field is Mark Taber, a specialist in savings bonds and investment scams.
His verdict on the proposed reforms is: "There has been inexplicable delay by Government for many years despite clear and urgent need."
And he cautioned: "OCG’s (organised crime groups) are behind the majority of frauds and scams in the UK. They will have no problem providing fake or stooge ID to Companies House if checks are not very rigourous."
investigate@mirror.co.uk
