A Guardian analysis has revealed that the practice of 'phoenixism' – where insolvent recruitment companies are acquired out of administration by their former directors, free of debts – is costing the exchequer tens of millions of pounds in lost taxes. HM Revenue and Customs (HMRC) estimates the practice costs taxpayers about £800m a year.
Several fresh cases have emerged since the autumn. In September, recruitment firm Russell Taylor was acquired in a pre-pack administration for £200,000 plus £550,000 in instalments, leaving HMRC debts of almost £1m unpaid. This was the second time connected parties had resurrected the business from insolvency in a decade, with managing director Robert Kurton involved in previous iterations. A spokesperson for Russell Taylor Group said Kurton previously held a minority stake and did not have significant control.
Similarly, food and drink recruiter Silven Recruitment was bought for £150,000 in November by Jeremy Pierce, who was its director and majority shareholder. The company owed HMRC about £600,000, reduced to around £400,000 during administration. Pierce rejected claims of phoenixism, stating administration was a last resort after exhausting other options.
In another case, Qualiteach – a teacher supply firm – was sold for £27,000 to a connected party in September, despite owing the taxpayer at least £304,988. The administrator's report noted common director and shareholder Josh Brandon between Qualiteach and purchaser QTEG.
Analysis of HMRC data suggests phoenixism accounted for about £840m, or 22%, of the £3.8bn in tax losses reported in 2022 to 2023. Notable earlier examples include Challenge Recruitment Group, where the government is chasing £90m in unpaid taxes after the firm was rescued in an £18m deal, and Premier Group Recruitment, which went into administration with £647,000 owed to HMRC before its assets were acquired by a company founded by its former director.
