Welcome to China Street. Scam companies are taking over British homes and making huge profits.

November 27, 2024, 12:50 | Updated: 27 November 2024, 13:03

Chinese companies are fraudulently registering at home in the UK. Photo: LBC

LBC has found that fake online companies could be defrauding the Exchequer of hundreds of millions of pounds in tax, while MPs have called on Companies House to do more following our findings.

Figures seen by LBC show that 30,000 Chinese companies have been registered with UK addresses so far this year, many of which are believed to be fraudulent.

Registering an address for a new company in the UK is simple. No proof of residence or connection to a registered property is required.

The entire process through Companies House takes less than 24 hours and costs 50 (a recent increase from 12 in May) and the system is being utilized.

READ MORE: Matthew Wright 'squeezed' over 19k scam as he reveals how scammers tricked him into handing over banking details

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Letters residents received after a company fraudulently registered their address. Photo: LBC

LBC discovered 70 Chinese-run companies registered to 38 homes on one street in a West Sussex town in just one week.

Residents of Billingshurst received a letter from Companies House in April congratulating the company's new director. It states that its nationality is China, its country of residence is the UK, and its occupation is businessman, indicating that the company is a scam.

These companies claimed to be selling shoes, perfume and cosmetics or were unprofessional wholesalers.

Woman targeted by Chinese fraud company registering company at her address

Some residents have started receiving letters from UK registered banks advertising business accounts.

One resident, Julie Waulmsley, said: Letters have started arriving from Companies House. Then one evening I came home and saw three more company letters beyond my door. The letter went on and on.

I ended up receiving seven Companies House registration letters, a letter from HMRC and several credit card applications to my address, which was really worrying and stressful.

One of the targeted housing complexes. Photo: LBC

I've had to get my accountant and his legal team involved because I can't afford the damage to my credit score or the legitimate company's credit score and I'm still waiting for a bill from my accountant to help me sort this out.

Graham Barrow, a financial expert who runs a company called RiskAlert247, which tracks suspicious companies appearing in the UK, told LBC this year that he had “seen between 200 and 300 Chinese companies registered with UK addresses”. He believes there is a “highly organized crime syndicate” behind it.

“These companies are selling legitimate, non-branded products, including small electronics, toys and household items, to UK consumers tax-free,” he said.

Many of these companies using UK addresses or virtual addresses do not receive VAT refunds. You do not have a registration number or you are using someone else's VAT registration number. They are defrauding HMRC of hundreds of millions of pounds.

It is a big problem that is visible to the eye, and it is a huge crime that goes unreported due to the loss of tax revenue such as value-added tax and corporate tax.

Police officer postpones retirement to help elderly victims of fraud

The massive expansion of Chinese businesses using UK addresses this year has been dramatic.

In just one day in May, 791 Chinese nationals registered businesses in the UK,” Mr Barrow said.

We're talking about 30,000 companies coming out of China, but registered here in the UK, so it's very difficult to think of their activities as being completely independent.

In October we saw a huge increase in the number of Mexicans registering businesses at UK addresses previously registered by Chinese businesses. Now Companies House is cracking down on removing fraudulent Chinese companies from its register. Scammers are simply changing their nationality to continue their trade.

Commenting on LBC's findings, the All-Parliamentary Group on Anti-Corruption and Accountability said: We are in a cost-of-living crisis and people are struggling to feed their children and heat their homes.

It is truly shocking that we are giving tax evaders a loophole to avoid paying their fair share.

Companies House needs to address this issue. If it is discovered that these fake registrations are the work of organized crime groups, the relevant crime agencies should intervene and, indeed, should be given the resources and powers of government to do so.

Foreign Correspondent Michael Sheridan explains why the UK is not China's favorite country.

A Companies House spokesperson told LBC: We take fraud seriously and fully investigate all allegations.

Since March we have been using our new powers to crack down on misuse of the register by interrogating and questioning information provided by companies.

If inaccurate, questionable or fraudulent documents are submitted, we will take appropriate action. We actively share information with other relevant government agencies and law enforcement agencies.

We are starting strike proceedings in 3,000 companies every week.

Between March 4 and November 11, Companies House removed 50,400 registered office addresses, 39,600 executive addresses and 36,700 PSC addresses.

Within the next two years, we will introduce mandatory identity verification checks for new and existing directors (and equivalent directors), those with significant control and those filing information at Companies House.

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