Identity verification is the legal process of confirming that a person or organisation is who they say they are. It helps prevent fraud, tax evasion, money laundering, terrorist financing, and abuse of financial systems. Businesses must prove that clients are legitimate before providing services — especially when risk is higher.
When Identity Checks Are Required
- When onboarding new clients
- If risk levels change or suspicious activity appears
- Before offering regulated professional services
- When payment behaviour or ownership suddenly changes
These checks are not optional. Failure to verify identity can lead to penalties, account freezes, investigations, reputational damage, and criminal consequences.
Acceptable Proof of ID & Address
Proof isn’t just a name written in an email — it must be documented. Typical verification includes:
- Passport or driving licence
- Recent utility bill or council tax statement
- Bank statements showing address
In some cases, enhanced checks (E-KYC) are required — such as source of funds, ownership structure, or AML screening.
Risk-Based Assessment Matters
Not all clients have the same level of risk. Businesses should apply stronger verification when:
- Clients operate internationally
- Payments vary unexpectedly
- Large or unusual transactions occur
- Clients come from high-risk industries
Good record-keeping protects you. Compliance is not just a legal obligation — it’s a financial safeguard.
Record Keeping Requirements
Keep ID documents securely for a minimum of five years. Store clean digital audit trails in accounting systems, encrypted drives, or secure cloud platforms. Never hold data informally in WhatsApp chats or desktop folders.
Consequences of Getting It Wrong
If identity verification fails or is ignored, businesses risk:
- HMRC penalties
- Financial loss from unpaid invoices
- Regulatory investigation
- Permanent reputation damage
Preventing risk is cheaper than fixing mistakes later.
Episode Timecodes
- 00:00:00— Why identity verification matters
- 00:01:32— When checks are legally required
- 00:03:18— What documents are acceptable
- 00:05:02— Red flags & high-risk scenarios
- 00:06:44— Compliance tips for business
- 00:09:11— Final thoughts
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Transcript
If you are a company and you are connect to that company by way of what's called a PSC or director, then it applies to you. I'm going to be talking about why identity verification matters, the key dates, and who must actually verify. We’ll look at how that process is actually done and there are two options
::I'm going to be talking through, the consequences and there will be consequences of not actually verifying and why it actually masses. Let's crack on.
::th of November,:::Let's break this down. What does it mean actually for your business? And firstly, we're going to look into why identity verification matters. Now Companies House are saying that they're cleaning up the register, that's the Companies House register where all companies are listed in the United Kingdom.
::nd Corporate Transparency Act:::d to verify between November,:::th, November,:::for all of this is November,:::Now having explained the background for it and who it applies to, how do you actually do this? And there are two verification routes available, and we give our clients both of those options. Option number one, which is free, so there's no fee to pay, it's just your own time. It's relatively quick. If it works smoothly, the two verification routes for as follows.
::Option one, use the Gov UK One Login. It should be issued to you by Companies House. If you don't have that, ask your accountant. And if you haven't got an accountant, by all means contact us and we'll help you out with this. Now it's free. It's relatively fast, assuming there are no issues with address changes.
::If you're comfortable with technology, it should be a relatively straightforward task. A mixture of our clients manage this successfully and a mixture of our clients just give up at the first hurdle and they find it very stressful. Now, option number two. It's to use an authorised corporate service provider, ACSP for short.
::Now, it so happens that I Hate Numbers is an ACSP. We've registered, we've got the infrastructure, and we can, and have done verifying identities for individuals resolving any issues, manage the process from start to finish. It's relatively smooth for the client. And option two is a paid service, but again, it just takes the aggravation hassle.
::But those are the two options you have Now, what are the consequences if you don't actually verify? Now, not verifying can lead to being unable to act as a director, confirmation statements that get rejected, and if confirmation statements, by the way, are not updated, that tends to be a trigger towards action of Companies House removing from the register
::if they're not updated in time. It flags a compliance issue and potentially, enforcement action. Now, Companies House, because it's a transition year, will contact companies directly with help and guidance. So what might seem a bit of a nightmare situation can be rectified. Now, why does this all matter?
::Well, apart from it being legal, identity verification effects, company formation, director appointments, PSC registration, confirmation statements and compliance obligations. Now, I Hate Numbers can verify directors, by the way. One of the advantages of us doing this is you don't have to do the digital ID yourself.
::We can verify directors and PSCs, manage the filings and support wider financial needs, including company secretarial services, cloud accounting, tax planning, and all that jazz. Now, this is a major change, but if you have the right support and guidance, if you're comfortable with technology and all the rest of it, it should be a relatively straightforward thing.
::Again, amongst our own client base, we've got a mix. Some people prefer to delegate that responsibility and we take care of it for them. Or they prefer to battle the tech. Some people have managed it quite quickly. Some people struggle. The choice is yours. Whichever route you adopt, folks, though, please make sure that you do it sooner rather than later.
::Don't leave it on the back burner. Plan it, do it and profit.