Question to the HM Treasury:

To ask His Majesty's Government what assessment they have made of the cost to the exchequer of the practice of phoenixism; and what actions they are taking to restrict directors and shadow directors of companies in administration or liquidation from acquiring the assets of such companies at a discount.

HM Revenue and Customs (HMRC) estimates that, in 2022-23, phoenixism accounted for 22% of total tax losses. These losses arise from a combination of write-offs and remissions. Overall tax losses were £3.8 billion (based on Annual Reports and Accounts from July 2023, the latest available data).

HMRC, Companies House and the Insolvency Service have agreed a joint plan to address phoenixism which includes increasing the use of upfront payment demands (securities), with the aim of doubling the amount of tax protected to £250 million by 2026–27, making more directors personally liable for company taxes during 2025–26, and increasing the number of Insolvency Service enforcement outcomes in phoenixism cases.

In the Budget in November 2025, the government announced it was taking action to tackle those who abuse insolvency processes to evade tax and write off their debts. The government will fund the recruitment of 50 additional Insolvency Service staff within a new Abusive Phoenixism Taskforce to disqualify more rogue directors and will amend the Company Directors Disqualification Act to extend the circumstances in which directors who break the law can be disqualified.

Administrators and liquidators have a statutory duty to act in the interests of creditors, to whom they must report, and obtain the best value for any assets of the company. The Administration (Restrictions on Disposal etc to Connected Persons) Regulations 2021 impose additional requirements for providing information to creditors, including an independent evaluation, where company assets are sold to connected parties within 8 weeks of the start of an administration, including in so-called pre-pack sales.