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HM Revenue & Customs is seeking to recover about £90 million in unpaid taxes from temporary staffing business Challenge Recruitment Group, after the company was rescued from insolvency in an £18 million pre-pack administration deal.
The US workforce platform swipejobs acquired Challenge’s core assets in July, taking over contracts with major UK clients including Tesco, Sainsbury’s and Co-op. Administrators FRP confirmed that the deal paid £4.9m for Challenge’s contracts and £12.7m to secured lenders Close Brothers and Praetura Asset Finance, repaying private funders in full.
By contrast, HMRC and other unsecured creditors are expected to recover only a fraction of what they are owed.
According to FRP’s report, four Challenge group companies in administration owe HMRC around £34m. A further £56m liability sits with TLR White Trading, a company spun out of Challenge in October 2024 to handle payroll and staffing costs. TLR White entered insolvency in April 2025, leaving months of VAT and PAYE unpaid.
The case marks the second time the business has collapsed leaving HMRC with heavy losses. In 2022, when trading as IF Trade Co, the group transferred contracts to Challenge-trg before entering administration with another £34m owed to the exchequer.
Brothers Richard and Thomas Cropper, directors of both IF Trade and Challenge, sold 75% of Challenge to an employee ownership trust in October 2024, nine months before the latest administration. They have since been retained on a six-month consultancy contract by swipejobs.
The affair highlights the practice known as “phoenixism”, where companies are liquidated and re-emerge under new entities, leaving debts — particularly unpaid taxes — behind. HMRC estimates phoenixism accounted for 22% of the £3.8bn in tax losses in 2022–23.
An HMRC spokesperson said: “As the chancellor announced in her spring statement, the government is taking action to improve collaboration between HMRC, Companies House and the Insolvency Service to tackle those using contrived corporate insolvencies and dissolutions — so-called ‘phoenixism’ — to evade tax.”
The revelations come as Chancellor Rachel Reeves faces growing pressure to raise additional revenues in the autumn budget to plug a fiscal gap of up to £40bn. Business groups have warned, however, that piling further tax rises onto firms could dampen investment and growth.
For HMRC, the Challenge case underscores the scale of unpaid tax liabilities being written off in insolvencies — and the urgency of reforms to stop repeat collapses leaving the taxpayer short-changed.
