The Government has been asked to set out how it is tackling the use by Iran and other state actors of UK-registered companies to avoid sanctions.

The head of the Business and Trade Committee said that foreign powers are abusing systems like the Companies House database, which all UK companies are registered to.

The letter comes days after the Financial Times revealed that a Government-backed Iranian oil firm was moving money through a series of UK-based shell companies.

Those companies had managed to open bank accounts with major high street lenders in the UK, despite the oil company being sanctioned by the US.

Liam Byrne, who chairs the committee, asked whether the Department for Business and Trade would publish an estimate of the scale of UK corporate vehicles being used to evade sanctions.

He also wants to know what steps the department is taking to tackle the abuse of so-called Limited Liability Partnerships, and what its targets were for challenging sanctions evasion over the next year.

“Iran is using the UK’s corporate registration regime to enable sanctions evasion,” he said.

“This is not an isolated problem, but part of a broader pattern of abuse of UK-based corporate vehicles – including those linked to fraud, terrorism and money laundering.”

He also asked the Government to publish an estimate of how much fraud costs UK businesses. By one measure, that could be as much as £157.8 billion in a year, he said.

He added: “I note that Companies House received more than 10,000 applications in 2021-22 disputing falsely registered addresses, along with 2,000 applications to remove directors from the corporate register who were incorrectly listed as running companies.

“Some victims have reported finance being fraudulently taken out in their names, while other cases have involved serious organised crime and sanctions evasion.”