The cost of registering a business will fall to as little as £10 in April, cementing Britain’s appeal as a cut-price hub for company formations. Companies House said in February that it was cutting incorporation fees for most direct applicants from £15 to £12 and for agents using special Companies House software from £13 to £10. It calculates its fees based on how much it costs to provide its services and its costs have dropped because of increased take-up of online registration.

A probe by HM Revenue & Customs a few years ago found a growing number of European companies — particularly from Germany — were choosing to incorporate in Britain because of the low charges.

On average, industrialised countries charge 32 times as much as the UK for incorporations, according to the World Bank

The move will push the UK even closer to the top of a World Bank league table of business-friendly jurisdictions but will add to concerns it is facilitating fraud.

The number of businesses registered with Companies House, the official registrar, has jumped by 46 per cent since the 2011 launch of a “citizens” company registration service that involves a simple online form and no mandatory money laundering checks.

Money laundering and fraud;

The rise in registrations has focused attention on money laundering risks, as many international banks will move cash more readily to companies than to individuals.

Secret shell companies are often used to obscure the beneficiaries of fraud. In a recent example, a company incorporated directly with Companies House was used to move funds to the UK. False names and addresses were provided for the directors and shareholders, apparently to disguise the relationship to the fraud suspect.

Worries about fraud, money laundering and terrorism prompted David Cameron to announce a public record of companies’ beneficial ownership, which he says will “open up a new era of corporate transparency in Britain”.  However, many specialists are convinced that a system that relies on owners to identify themselves will fail to expose criminals. In a 2011 report on corruption, the World Bank said registers “clearly are not a panacea for the misuse of legal entities” and urged governments to force the agents that set up companies to conduct due diligence on owners.