Taxpayers miss out on millions after phoenixism' at UK recruitment firms

"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."

"In September, a recruitment company called Russell Taylor was acquired from a pre-pack administration for 200,000 plus subsequent instalments totalling 550,000, seemingly leaving debts to HMRC of almost 1m that are not expected to be repaid. The transaction was the second time connected parties had resurrected the business from insolvency during the past decade, after Russell Taylor Management was initially acquired from administration in 2015."

"The two insolvencies created three iterations of the business involving the current managing director, Robert Kurton, who the administrator's report says was previously a director of Russell Taylor Management between November 2014 and March 2015, while other corporate filings list him as a 7% shareholder in that business's successor company, itself acquired out of administration in September. The administrator's report stated that Kurton will be a director and shareholder of the [latest] purchaser."

Phoenixism enables directors or shareholders to liquidate insolvent recruitment companies and then reacquire the business debt-free through pre-pack administrations. HM Revenue and Customs estimates the practice costs taxpayers about £800m a year. Recent staffing-company pre-pack sales show previous owners or management continuing to trade parts of the business. In one case, Russell Taylor was bought for £200,000 plus later instalments totalling £550,000, leaving almost £1m of HMRC debt unlikely to be repaid. The transactions produced multiple iterations of the same business linked to managing director Robert Kurton, who is reported to become a director and shareholder of the purchaser. A spokesperson says Kurton was formerly a minority shareholder without significant financial control and now leads the new company.

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