Accountants including insolvency practitioners and mergers and acquisitions advisers could be denied access to key historical records under the plan, potentially concealing evidence of wrongdoing and incompetence by directors.

The move could potentially make it harder for directors’ track records to be assessed. A litany of company failures is often considered a warning sign about a director, but in future only a relatively small snapshot of a director’s past would be available should the proposals go ahead.

It is estimated approximately 2.5 million records are under threat. The proposal is primarily driven by data protection concerns and complainants citing the right to be forgotten. Complaints have risen significantly since Companies House moved to a free service last year.

‘Emotively people are saying they have a right to be forgotten, but I think this is an abuse of that so-called right,’ Mercer and Hole corporate advisory partner Chris Laughton told CCH Daily. He cited asset tracing, forensic work and due diligence as areas that could suffer under the plans.

‘Frankly, I don’t believe it’s particularly damaging for ordinary business people who have had a company go through insolvency for that to be shown at Companies House,’ he added. ‘Just because your company went bust and you were a director doesn’t necessarily mean you’re culpable. We have a completely different regime for that, the Company Directors Disqualification Act.’

‘Just because a company is no longer live isn’t any good reason for removing it from the statutory register,’ he said.

Widely-used resource

Police investigators, the National Crime Agency, the Serious Fraud Office, lawyers, journalists and bank compliance teams all make extensive use of the data in the course of their work.

‘It’s vital that an insolvency practitioner has access to historical records,’ said Adrian Hyde, vice president of insolvency and restructuring trade body R3. ‘If Companies House goes ahead with its plan, insolvency practitioners following an evidence trail will repeatedly come to dead ends. Creditors will lose money and fraudsters’ historic wrongdoing will be hidden.’

He added it is ‘not uncommon’ for an insolvency practitioner to need to look into or resurrect a company many years after it has been dissolved.

‘Evidence of wrongdoing or claims available to a company may take years to come to light, or assets may be hidden or forgotten about,’ he warned.

For its part, Companies House said it has ‘always had an obligation to delete expired records after a certain period of time has elapsed’.

‘It is not unusual for public bodies to review their data handling practices to ensure they comply with data protection law,’ it said in a statement.

It also confirmed it is ‘committed’ to holding a full public consultation ‘before any decision is made’.