The UK government is seeking around £90 million in unpaid taxes following the rescue of a temporary staffing company through an £18 million deal that fully compensated its private lenders.

Challenge Recruitment Group, a staffing supplier to major clients such as Tesco, Sainsbury’s, and Co-op, saw its primary assets purchased by US-based swipejobs in July. This marks the second instance the staffing company has emerged from insolvency still owing large sums to HM Revenue and Customs (HMRC).

These revelations come as Chancellor Rachel Reeves faces increasing calls to raise taxes in the upcoming autumn budget to support the nation’s finances.

As detailed in a report by administrators FRP, swipejobs paid £4.9 million for a selection of Challenge’s recruitment contracts, as well as £12.7 million to secured creditors Close Brothers and Praetura Asset Finance, under a “pre-pack” insolvency agreement.

In a pre-pack administration, a buyer agrees to purchase specific assets of a company just before it enters insolvency, letting the core business continue without burdening it with previous debts, while administrators distribute sale proceeds to creditors.

However, many creditors — notably HMRC — are unlikely to recover more than a small portion of the money owed to them.

The announcement on 12 July of Challenge’s asset acquisition by swipejobs did not disclose any financial trouble. The statement simply claimed: “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.”

Reports indicate that four divisions of Challenge currently in administration owe HMRC approximately £34 million.

In addition, another firm, TLR White Trading, is reported to owe around £56 million related to five months of VAT and four months of PAYE liabilities attached to Challenge's overall trading activities. TLR White Trading began its own insolvency procedure in April 2025, six months after splitting from Challenge Recruitment Group in October 2024. Created to manage payroll and staffing for the larger business, TLR was financially supported by the group to cover wage-related expenses.

The current insolvency follows a similar collapse in 2022, when the same business — then named IF Trade Co — transferred its key contracts to Challenge-trg before entering administration with a £34 million HMRC debt. Records show Richard and Thomas Cropper were directors of both businesses.

Subsequently, in October 2024, the Cropper brothers sold 75% of Challenge to an employee ownership trust, months before the company became insolvent.

Swipejobs stated that it had taken over Challenge's assets as part of a forward-looking plan and noted that both brothers had been retained under a six-month consultancy agreement. Attempts to reach the Croppers for comment were unsuccessful.

HMRC estimates that so-called “phoenixism” — where companies are closed down and their directors start new firms free from old debts — was responsible for around 22% of the £3.8 billion in tax losses during the 2022–2023 fiscal year.

An HMRC representative commented: “As outlined in the spring statement, the government is strengthening coordination between HMRC, Companies House, and the Insolvency Service to crack down on the strategic misuse of company closures and reboots — commonly referred to as ‘phoenixism’ — to avoid paying tax.”