Penalties average 65% of tax liabilities on latest HMRC defaulters list – RSM UK

Penalties imposed by HM Revenue and Customs (HMRC) on tax defaulters averaged 65% of their total tax liabilities, RSM UK said.

HMRC recently published its latest list, naming 196 taxpayers who received tax penalties. The penalties totalled £36m against tax liabilities of £56m.

This represents a 30% increase compared to 150 named three months ago, and a 43% rise on six months ago, when 137 were named.

RSM UK corporate tax partner Paul Marcroft said: “Penalties totalled £36m on tax liabilities of £56m, meaning fines averaged 65% of the total tax liability.

“The list also publishes details of those involved, including the nature of the unpaid tax and the taxpayer’s address.

“As with previous editions, the most heavily represented sectors were construction, trade, retail and hospitality.”

On the distribution of cases and the impact on smaller enterprises, Marcroft said: “Only 17 taxpayers had tax liabilities of more than £500,000, while 58 had liabilities of less than £50,000.

“This suggests that smaller businesses and individuals may be disproportionately represented. This could reflect a lack of access to specialist advice, or a limited understanding of how penalty mitigation works in practice.

“If these taxpayers had achieved the maximum available reduction in penalties, their details would not have been published.”

Highlighting commercial and supply chain implications, Marcroft added: “Being included on the list can cause significant reputational damage.

“In certain circumstances, HMRC can seek to recover unpaid VAT through the supply chain under the Kittel principle, where businesses have failed to carry out sufficient checks.”

On addressing irregularities, Marcroft concluded: “The September 2026 publication is a timely reminder that early action is critical. Where a business or individual identifies a tax irregularity, it is usually better to seek professional advice and engage proactively with HMRC than to wait for an enquiry to begin.

“Where deliberate behaviour is involved, HMRC’s Code of Practice 9 (COP9) may be relevant. However, taxpayers who make full disclosures under COP9 are not automatically protected from HMRC’s naming and shaming regime.

“Unless they achieve the maximum penalty mitigation, publication may still occur. Specialist advice at an early stage can therefore play a crucial role in managing the process, maximising mitigation and reducing the risk of public disclosure.”