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According to the Metropolitan Police, fraudsters are thought to cost UK businesses more than £50m a year by assuming the identity of a legitimate company to obtain credit, goods and services illegally.

Typically they change the details of a registered limited company - such as names of directors or the company secretary or the registered address - at Companies House without the knowledge of the company concerned.

Suppliers who provide goods or services to the fraudsters without conducting suitable credit checks risk being hit by significant bad debts. And companies whose identities are stolen may suffer damage to their reputation.

The Metropolitan Police is working with Companies House and credit-reference agencies including Experian and Equifax to tackle the problem. It recommends that businesses should take the following steps to protect themselves from fraud:

* Do not rely on Companies House records when checking potential customers. You might consider using credit-reference agencies, seeking trade references from the customer's other suppliers and searching the Register of County Court Judgments.
* If you are a limited company, check your details are registered correctly at Companies House and that they have not been fraudulently changed.
* File company documents electronically at www.companieshouse.gov.uk. Signing up for the free, password-protected PROOF scheme offers further protection as you can request that only changes submitted electronically are accepted.
* Consider signing up to the Companies House email alert system which informs you if any changes to your details are made.

"This is not a victimless crime and the cost to those companies that have become victims can range from untold damage to their company's reputation to them actually going out of business," said Phil Cotter, managing director of Experian's business information division.

* For more information on company identity theft visit www.met.police.uk/fraudalert

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