Insolvent recruitment businesses shorn of their debts then reacquired from administration by the directors or shareholders that presided over their demise are costing the exchequer tens of millions of pounds in lost taxes, a Guardian analysis suggests.
The practice of “phoenixism” – the art of liquidating a company and allowing the directors to rise from the ashes with a new entity, free of debts – is estimated by HM Revenue and Customs (HMRC) to have cost taxpayers about £800m a year.
Since the autumn, a series of fresh cases have emerged where staffing businesses have been acquired out of pre-pack administrations – an insolvency process agreed in advance – and continued to trade partly under the control of previous owners…