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\nThe US employment platform swipejobs acquired Challenge\u2019s essential assets in July, assuming contracts with prominent UK clients such as Tesco, Sainsbury\u2019s, and Co-op. Administrators FRP confirmed that the transaction paid \u00a34.9m for Challenge\u2019s contracts and \u00a312.7m to secured creditors Close Brothers and Praetura Asset Finance, fully repaying private investors.<\/p>\n
In contrast, HMRC and other unsecured creditors are anticipated to recover only a small portion of their claims.<\/p>\n
According to FRP\u2019s report, four Challenge group entities in administration owe HMRC around \u00a334m. An additional \u00a356m liability is associated with TLR White Trading, a company created from Challenge in October 2024 to manage payroll and staffing expenses. TLR White entered insolvency in April 2025, resulting in several months of VAT and PAYE remaining unpaid.<\/p>\n
This situation marks the second occasion the business has fallen, leaving HMRC with substantial losses. In 2022, when operating as IF Trade Co, the group relocated contracts to Challenge-trg before going into administration with another \u00a334m owed to the treasury.<\/p>\n
Brothers Richard and Thomas Cropper, directors of both IF Trade and Challenge, transferred 75% of Challenge to an employee ownership trust in October 2024, just nine months prior to the latest administration. They have since been engaged on a six-month consultancy basis by swipejobs.<\/p>\n
The scenario underscores the phenomenon known as \u201cphoenixism<\/a>\u201d, where companies are dissolved and reappear under new entities, leaving behind debts \u2014 particularly unpaid taxes. HMRC estimates that phoenixism accounted for 22% of the \u00a33.8bn in tax losses in 2022\u201323.<\/p>\n An HMRC representative stated: \u201cAs the chancellor declared in her spring statement, the government is taking measures to enhance cooperation between HMRC, Companies House, and the Insolvency Service to address those exploiting artificial corporate insolvencies and dissolutions \u2014 commonly referred to as \u2018phoenixism\u2019 \u2014 to avoid tax.\u201d<\/p>\n The disclosures arise as Chancellor Rachel Reeves encounters increasing pressure to generate additional revenues in the autumn budget to address a fiscal shortfall of up to \u00a340bn<\/a>. Business organizations have cautioned that imposing further tax increases on companies could hinder investment and growth.<\/p>\n For HMRC, the Challenge case highlights the magnitude of unpaid tax obligations being forfeited in insolvencies \u2014 emphasizing the necessity for reforms to prevent recurrent collapses from leaving taxpayers at a disadvantage.<\/p>\n