Taxman loses £836m revenue to 'phoenixing'

HM REVENUE & Customs has lost more than £800million through a tax loophole that is open to abuse by small businesses in the UK.

- By Amber Murray

The practice known as “phoenixing” is where companies repeatedly liquidate then set up as a new, identical, debt-free business. The tax authority lost £836m to this practice in the 2022-23 tax year, the latest for which data is available, 45% higher than the £570m estimated in previous reports.

HMRC put the loss down to pandemic-era delays in companies declaring insolvency.

Phoenixing accounted for around a fifth of HMRC’s tax losses - money owed but unable to be collected for 2022-23.