HM Revenue & Customs (HMRC) is attempting to recover around £90 million in unpaid taxes following the collapse of Challenge Recruitment Group, a staffing provider supplying workers to Tesco, Sainsbury’s and Co-op.
In July 2025, the firm’s key assets were sold through an £18 million pre-pack administration to US platform swipejobs, ensuring secured lenders were repaid in full. But the deal left the tax authority, one of the largest unsecured creditors, facing a significant shortfall.
The case has reignited concerns over phoenixism where businesses shed debts through insolvency, only to re-emerge under new ownership structures.
Breakdown of debts
FRP Advisory, the administrators, confirmed the following debts
- £34 million owed by four Challenge companies placed into administration.
- £56 million owed by TLR White Trading, a payroll vehicle spun out of the group in October 2024, which collapsed in April 2025 after failing to pay VAT and PAYE for several months.
Altogether, the exchequer is left chasing nearly £90 million, with little prospect of recovering more than a fraction. if someone not declaires their assets , there is Punishment for not declaring income UK.
Who got paid and who didn’t
Swipejobs’ £18 million outlay was structured as follows:
- £4.9 million for Challenge’s contracts with major UK clients.
- £12.7 million to secured lenders Close Brothers and Praetura Asset Finance.
Unsecured creditors, including HMRC, are unlikely to see meaningful repayment.
A familiar pattern
This is not the first collapse under the same leadership. In 2022, when trading as IF Trade Co, the business shifted its contracts to Challenge-trg before entering administration with about £34 million owed to HMRC.
Brothers Richard and Thomas Cropper, directors throughout both episodes, sold 75% of Challenge to an employee ownership trust in October 2024. Nine months later, the group collapsed again. The Croppers are now retained as consultants by swipejobs under six-month contracts.
Phoenixism in focus
HMRC estimates that phoenix practices were responsible for 22% of the £3.8 billion tax losses reported in 2022–23.
An HMRC spokesperson commented:
“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.”
For smaller businesses facing genuine difficulties rather than contrived insolvency, HMRC does allow appeals against penalties in certain situations. Learn more in our guide to HMRC penalty appeals.
Swipejobs’ position
Swipejobs has described its acquisition as a “go-forward basis” deal, emphasising efficiency and technology. Its July announcement said
“We’re proud to announce that Challenge-trg Group has been acquired by swipejobs Together, we are in an even better position to deliver exceptional results and enhanced operational efficiency; all underpinned by market-leading technology.”
The statement did not mention the financial distress. The Croppers have not publicly commented.
Political implications
The revelations come just weeks before Chancellor Rachel Reeves’ autumn budget. With public finances under pressure, high-profile cases of unpaid tax are likely to intensify calls for stricter insolvency rules and tougher penalties for directors involved in repeat collapses. For official guidance on how HMRC deals with company insolvencies, visit GOV.UK’s insolvency guidance.
Final Summary
HMRC left chasing £90m tax shortfall.
The collapse of Challenge Recruitment leaves HMRC exposed to a £90 million loss, even as secured lenders walk away whole and the business continues under new ownership. For taxpayers, it raises fresh concerns about fairness and accountability in corporate insolvencies.
As Reeves prepares her budget, the case underscores a pressing challenge: ensuring that insolvency law protects not only creditors, but also the exchequer and by extension, the public purse.
