The practice, known as phoenixing, is where companies are placed into insolvency but the business and its assets are transferred over to a new, identical company, leaving creditors unpaid.
This includes suppliers, customers and HMRC, which lost £836 million to small‑business phoenixing in the 2022-23 tax year, the latest year for which data is available.
This was 45pc higher than the £570 million previously estimated, with phoenixing accounting for a fifth of HMRC’s losses which it never expects to recover.
There were 23,938 registered company insolvencies in England and Wales last year, with the vast majority (18,525) being creditors’ voluntary liquidations where directors chose to put their companies into…