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Insolvent recruitment companies that shed their debts and are then bought back from administration by the same directors or shareholders who oversaw their collapse are costing the UK exchequer tens of millions of pounds in unpaid taxes, according to a Guardian analysis.
This practice, known as “phoenixism”, involves winding up a company and restarting the business under a new entity free from previous liabilities. HM Revenue and Customs (HMRC) estimates that phoenixism costs taxpayers around £800m every year.
Since last autumn, several new cases have come to light in which recruitment firms have been rescued through pre-pack administrations – insolvency deals agreed in advance – and have continued trading with involvement from former owners or managers.
One such case involves recruitment firm Russell Taylor, which was acquired from a pre-pack administration in September for £200,000 plus instalments totalling £550,000. The deal appears to have left nearly £1m owed to HMRC unlikely to be recovered. This marked the second time in a decade that connected parties had revived the business following insolvency, after a similar transaction in 2015.
The repeated collapses created three versions of the company involving the current managing director, Robert Kurton. Administrators noted that Kurton had previously been a director and shareholder in earlier incarnations of the business and would again serve as director and shareholder of the latest purchaser.
A spokesperson for Russell Taylor Group said Kurton previously held only a minority stake without significant financial control and that the administration process is ongoing.
In another case, Silven Recruitment, a specialist in the food and drink sector, was bought out of administration in November for about £150,000. At the time, the company reportedly owed HMRC around £600,000, later reduced to roughly £400,000. The buyer, Northbridge 75, is owned by Jeremy Pierce, who was also Silven’s director and majority shareholder.
Pierce denied that the deal amounted to phoenixism, saying administration was unavoidable due to trading conditions and that the pre-pack sale provided the best outcome for creditors while protecting jobs.
Qualiteach, a teacher supply agency, was also sold in September to a connected party for £27,000 despite owing nearly £305,000 in tax. Administrators noted that both the failed company and its purchaser shared the same director and shareholder. Qualiteach declined to comment.
HMRC data analysis suggests phoenixism accounted for about £840m – or 22% – of the £3.8bn in tax losses recorded in 2022–23. The latest cases add to growing concerns surrounding recruitment sector administrations in 2025.
Previously, the Guardian reported that the government is pursuing about £90m in unpaid taxes after Challenge Recruitment Group was rescued in an £18m deal that fully repaid private lenders, despite significant tax arrears. Similarly, Premier Group Recruitment entered administration in September with £2.9m in debts, including £647,000 owed to HMRC, before its assets were swiftly acquired by a company set up by its majority shareholder.
While some accountants argue that phoenixism can ultimately help recover tax revenue, critics remain sceptical. Professor Louise Gracia of Warwick Business School warned that the practice may encourage repeat insolvencies and create unfair competition, with economic harms likely outweighing any potential benefits.
