UK recruiter emerges from insolvency for third time, avoiding millions owed in tax

A UK recruitment business has been acquired out of administration for a third time in four years as part of a succession of deals that left some of the former management team in place and millions of pounds owed to the public purse.The chain of insolvencies appears to contain more examples of phoenixism – a process when companies are liquidated and directors are able to rise from the ashes with a new entity, free of debts.HM Revenue and Customs (HMRC) has estimated that phoenixism, which is generally legal, cost the exchequer about 22% of the £3.8bn of tax losses reported in 2022 to 2023.The Guardian has reported on a series of cases in the staffing sector since last summer, when a temp agency apparently emerged from insolvency for a second time while owing tens of millions of pounds to the exchequer.In the latest case, an administrator’s report details how two Hampshire-based recruitment companies – Sert Group and Sert Training – collapsed in January and were acquired for £196,304 by an unconnected buyer that insisted the previous management remained in place.The management, which includes Sert chief executive Mark Edwards and chief financial officer Ben Knight, had run two earlier iterations of the same business that had also gone into administration. Together, the three insolvencies appear to leave creditors £7.6m out of pocket, including about £4.5m owed to HMRC, according to research compiled by business data firm Tech City Labs.In February 2022, Edwards and Knight were directors of a recruitment business called 3R Global when it had its assets acquired by Sert Workforce Solutions for £60,000 after collapsing into administration.At the same time, the pair were also directors of Sert Workforce Solutions, which in turn entered administration in October 2024. Its assets were then acquired by Sert Training for £50,000 and 7.5% of future profits.Sert Training had the same owner as the previous two versions of the business, as well as Edwards and Knight listed as holding director roles. It lasted another 15 months before its administration and sale to an unconnected company called Meraki 6.The administrator’s report on Sert Training added that there were two offers to buy the insolvent business, which were contingent on the existing management remaining in post.“Following these discussions, it was confirmed by [Sert] management that they would only work with the purchaser. Shortly thereafter, interested party 2 withdrew from the process,” the administrator wrote.Lawyers for Meraki 6 said its purchase of the Sert business was not a case of phoenixism, as Meraki is not connected with the previous Sert owners and there were no common directors. They added their client’s deal had saved jobs, and it was unaware of the business’s previous insolvencies.After the Meraki 6 acquisition, Edwards continued to be listed as the Sert chief executive while being advertised as the main contact for jobs that the company has been promoting to candidates. Edwards and Meraki said he is leaving the business and is now on gardening leave.Knight continues to work for Sert, where a colleague identified him to the Guardian as continuing as the business’s chief financial officer. Meraki said Knight was no longer a statutory director or a shareholder.Edwards and Knight did not comment on the previous administrations.The Sert case follows others in the staffing sector. Last month, the Guardian reported how Premier Group Recruitment went bust owing HMRC and other creditors almost £3m, only to re-emerge promising to send its staff on an all-expenses paid trip to Las Vegas after being repurchased by its former owner for an initial £10,000.