While it is compulsory in the UK to embed an identity microchip in your pet, you should also have a clearly visable Pet identification tag.
Most animal sanctuaries and the RSPCA have scanners that detect and read the data on microchips, so they are a reliable way to properly identify the owner of an animal.
Microchips should not be used instead of tags. If you microchip your pet, an identification tag is still a very important item.
The most common occurrence when a pet is lost, and then found, is that it is found by a member of the public. If the animal appears in good health, then the first reaction of a person is to look for a collar tag with the pet's name on it and a contact address or telephone number.
Members of the public are unable to determine if an animal has been micro chipped, and will have to visit a vet or an animal sanctuary to have the animal scanned. This incurs a cost for the person who found the animal (both in time and money) and consumes time and resources of the vet or the sanctuary.
It is far easier and much more convenient for a member of the public to refer to details on the pet tag linked to the collar.