The UK exchequer is chasing about \u00a390m in unpaid taxes after a temporary staffing business was rescued from insolvency proceedings in an \u00a318m deal that reimbursed private funders in full.<\/p>\n
The main assets of Challenge Recruitment Group, which counted Tesco, Sainsbury\u2019s and Co-op among its top customers, were acquired from administration in July by the US website swipejobs, in what appears to be the second time the British staffing business has emerged from insolvency while owing tens of millions of pounds to the exchequer.<\/p>\n
The levels of debt owed by Challenge to HM Revenue and Customs has emerged as the chancellor, Rachel Reeves, is under pressure to announce tax rises in her autumn budget<\/a> in order to shore up the public finances.<\/p>\n Swipejobs paid \u00a34.9m as part of a \u201cpre-pack\u201d administration deal for the pick of Challenge\u2019s contracts supplying staff to a series of huge UK brands, as well as \u00a312.7m to the collapsed group\u2019s secured lenders, Close Brothers and Praetura Asset Finance, according to a report by administrators FRP.<\/p>\n A pre-pack administration is a restructuring deal agreed in advance of a company entering insolvency \u2013 a staged process that frees the acquired business of debt and leaves administrators to use receipts to at least partly pay creditors.<\/p>\n Challenge\u2019s remaining creditors, including HMRC<\/a>, will probably be repaid a fraction of what they are owed.<\/p>\n When the deal to acquire Challenge assets from administration was announced on 12 July, a statement by the UK group made no mention of the company\u2019s difficulties.<\/a> It said: \u201cWe\u2019re proud to announce that Challenge-trg Group has been acquired by swipejobs \u2026 Together, we are in an even better position to deliver exceptional results and enhanced operational efficiency; all underpinned by market-leading technology.\u201d<\/p>\n Four Challenge businesses in administration owe HMRC about \u00a334m, according to the administrator\u2019s report.<\/p>\n A fifth company, TLR White Trading, owes a further \u00a356m to HMRC relating to \u201cfive months of VAT and four months of PAYE\u201d incurred by the wider Challenge business. TLR White Trading entered a separate insolvency process in April 2025, six months after being spun out of the Challenge Recruitment Group in October 2024. The new standalone company had the sole function of providing \u201ctemporary staffing and payroll services\u201d to the wider Challenge group and was funded by the larger business in order to settle its \u201cpayroll costs\u201d.<\/p>\n The latest Challenge insolvency comes after the same recruitment business, then called IF Trade Co, transferred its main contracts to Challenge-trg in 2022, before entering administration with debts to HMRC of about \u00a334m, according to further documents filed with Companies House. Two brothers, Richard and Thomas Cropper, were directors of both IF Trade and Challenge-trg.<\/p>\n The siblings then sold a 75% stake in Challenge to an employee ownership trust<\/a> for an undisclosed sum in October 2024, nine months before the group companies entered administration.<\/p>\n skip past newsletter promotion<\/a><\/p>\n Our morning email breaks down the key stories of the day, telling you what\u2019s happening and why it matters<\/p>\n Privacy Notice: <\/strong>Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy<\/a>. We use Google reCaptcha to protect our website and the Google Privacy Policy<\/a> and Terms of Service<\/a> apply.<\/p>\n after newsletter promotion<\/p>\n Swipejobs said it had acquired Challenge assets on a \u201cgo-forward basis\u201d and that the brothers have been given a six-month consultancy contract. The Croppers did not respond to efforts to contact them.<\/p>\n