HMRC loses more than £800m to small business 'phoenixing'

HM REVENUE & Customs (HMRC) has suffered a loss of over £800 million due to a tax loophole exploited by small businesses in the UK.

- AMBER MURRAY

This loophole, known as 'phoenixing,' involves companies repeatedly liquidating and then reestablishing themselves as new, debt-free entities. The tax authority reported a loss of £836m to this practice in the 2022-23 tax year, the most recent period for which data is available. This figure is 45% higher than the £570m loss estimated in earlier reports.

HMRC attributes the loss to delays in companies declaring insolvency during the pandemic era.