Recommendation 27

The Insolvency Service disqualified 6,274 directors over the period 2018–19 to 2023–24, but only seven of these were for phoenixism.83 HMRC estimates that phoenixism accounted for 15% of its tax debt losses in 2022–23, which equates to at least £500 million.84 The Insolvency Service told us that it is not difficult for it to disqualify directors where it finds evidence of unfitness. It explained that there is no statutory offence for phoenixism, but it can be an aggregating factor in its determination of the seriousness of director misconduct.85 The Service explained that the seven disqualifications are cases where there was no more serious offence for it to pursue other than phoenixism.86 The Insolvency Service told us that the low number of disqualifications for purely phoenixism is not a good indication of the work it does in relation to protecting tax revenue, and said that it has increased the number of disqualifications last year by 30% from the previous year, as well as doubling the average length of disqualification to around 10 years.87 The Insolvency Service could not tell us definitively how much of its casework involves phoenixism, but estimated around 10%.88 It told us that it wants to increase its disqualification activity, and go further in publicising high– profile cases, but it could not put a figure on what a good response would look like.89 81 Qq 87 – 88 82 Q 89 83 C&AG’s Report, para 21 84 C&AG’s Report, para 1.12 85 Q 80 86 Q 84 87 Q 80 88 Q 81 89 Qq 82–83, Q86 18