New research from The Global Payroll Association (GPA) has revealed that companies involved in the transport and logistics sector have been fined a combined total of £1.9m for deliberately lying about the amount of tax they owe. 

The information was published following HMRC investigations between March and July 2024 involving a person or company charged with one or more penalties for deliberate tax defaults of more than £25,000.

The latest list identified a delivery driver who owed tax of £2,723,452 and received a penalty of £1,191,510.25, whilst a freight transport company owed tax amounting to £445,949 and was fined £312,164.30. A storage and distribution firm in London was also penalised with a £159,492 fine for failing to pay £233,688 in tax.

The digital services and content industry accounted for the largest share of a combined total of £22m in penalties, with companies fined £4.3m for deliberately defaulting on tax returns.

The property industry, including property development, comes in second, with fines amounting to £2.5m, followed by supply chain and wholesale trade (£2.3m), construction services including trades and engineering (£2.1m), and the agricultural industry with fishing and farming (£2m). 

Another sector found to be dodging its taxes is waste management and recycling services (£1.4m); income trusts (£1.35m), and the hospitality and food industry (£1.3m).

Melanie Pizzey, GPA chief executive and founder, said: “A business will deliberately default on their tax return in order to avoid paying as much tax as they owe.

“The motivation for this is often to increase their profit margin, or to reduce outgoings in order to maintain enough money to keep the company afloat and operational. The latter is more likely a motivation for startups or SMEs with a small operating budget. 

She added: “This may explain why digital services is the most heavily fined sector in the UK. Digital services companies often have small headcounts, and low outgoings, but can also have such limited funds that the simple duty of paying tax can push them over the edge between operating in the red and the black.” 

However, Pizzey warned, deliberately failing to pay tax can not only be costly but also damaging to businesses. She said:“It’s a false economy because the fines end up outweighing the original cost that was being avoided. 

“The same logic can be applied across the board. For example, it can be tempting to hire inexperienced people in order to pay lower wages, but the result is often inefficient or lacklustre output.

“And a company might choose to to avoid spending money on essential administrative processes such as HR and payroll to reduce costs, but by doing so, leave themselves exposed to the risk of process failure which results in staff not being paid promptly and properly, thus leading to high employee turnover when retention is by far the best path to sustainable success and profitability.”

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