HMRC chasing 90m in unpaid taxes after staffing firm Challenge rescued from insolvency

"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."

HM Revenue & Customs is pursuing roughly £90 million in unpaid taxes following an £18 million pre-pack administration that transferred Challenge Recruitment Group's core assets to swipejobs. Swipejobs paid £4.9m for contracts and £12.7m to secured lenders, while unsecured creditors including HMRC face minimal recoveries. FRP's report lists around £34m owed by four Challenge group companies and a further £56m liability in TLR White Trading, which entered insolvency after months of unpaid VAT and PAYE. The group previously collapsed in 2022 with similar HMRC losses, and directors sold 75% to an employee trust months before administration. The pattern is associated with phoenixism, which HMRC estimates caused a significant share of recent tax losses.

Read at Business Matters