Revenue Get Tough On "Phoenix Syndrome"

The "Phoenix Syndrome" describes the situation which arises when a company controlled by certain individuals goes out of business leaving substantial unpaid debts and little or no assets, and the business is taken over by another company under the control of those same individuals. In addition to the loss suffered by creditors of the first company, there is also concern that such individuals who abuse the protection of limited liability, gain an unfair competitive advantage over traders who meet their debt obligations. In most Phoenix Syndrome cases, tax is the major outstanding debt and the competitive advantage gained through non-payment of VAT and PAYE/PRSI can be very significant.

The Revenue Commissioners have recently announced plans to identify potential "Phoenix companies" and to challenge all aspects of their operation. In particular the Revenue announced their intention, where possible, to pursue debt recovery actions against directors of such companies for any