The danger is corporate identity theft, in which criminal gangs target small businesses in order to defraud their suppliers and creditors. The fraudsters exploit the statutory requirement of Companies House to accept paper-based applications to change a company’s details.

The criminals forge a director’s signature to make a bogus application to change a company’s registered address. Then they trade off the company’s good name to obtain goods on credit. After the supplies are delivered to the “new” address, the gang disappears with its haul. It usually takes weeks before the scam is uncovered — by which time the goods and fraudsters are untraceable. The suppliers lose their money while the victimised company may face a lengthy process to restore its reputation and its creditworthiness.

David Croucher, the home affairs chairman of the Federation of Small Businesses, believes that companies have to be vigilant: “Company identity fraud, though still mercifully rare, is on the increase and can go undetected for a long time.When it does happen, it can be devastating for small firms and, in the worst cases, businesses can go bust because of it.”

In an attempt to counter the fraud, Companies House has launched a free scheme called protected online filing (Proof), for businesses to file documents securely online. Proof requires passwords, confidential authentication codes and recognised e-mail addresses to change company details. However, criminals are never far behind technological advances. Some businesses that are signed up to the scheme report receiving calls from conmen purporting to be from Companies House.

David Waterman, managing director of I. Waterman (Boxmakers Ltd) in Whitechapel, East London, who signed up to Proof after discovering that criminals had tried to use the paper route to change his company’s address, received one such call last week.

“The caller said he wanted to clarify a couple of small errors on my file and asked me to reveal my authentication codes,” he said. “I was suspicious, so I started quizzing him and he soon hung up.”

To raise awareness, Companies House has posted a fraud warning on its website, explaining that its personnel will never telephone a business to check its Proof authentication codes.

Diane Williams, a consultant for the Finance & Leasing Association, who has conducted research into corporate identity theft, said: “Companies should shred their own and other company records that could give criminals a helping hand.”

She also recommends that businesses check up on companies who request credit with credit reference agencies.

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