A New Era Of Trade Sanctions: HMRC Bypasses Anonymity In Compound Settlement

On 29 June 2026, Petrofac Facilities Management Limited (Petrofac) became the first company to be publicly named by HM Revenue and Customs (HMRC) in a compound settlement. The settlement was valued at £569,157 for breaches of the Russia (Sanctions) (EU Exit) Regulations 2019 (the “Russia Sanctions Regulations”). Petrofac, a subsidiary of the LSE-listed global energy group, committed the relevant offences in 2022 and 2023 whilst winding down its Russian operations.

HMRC’s new publication policy

Importantly, the UK Government’s press release accompanying the settlement announcement (the Notice) stated that HMRC’s longstanding policy of anonymising compound settlement notices, in order to protect the identities of the offending companies, will no longer apply going forward. Anonymity has been historically defended by HMRC on the basis that it incentivises companies to self-report wrongdoing and engage proactively with the agency, with a view to securing an anonymised settlement. HMRC’s position has now reversed:

“Naming those involved brings us into line with other enforcement partners whilst sending a clear message on the consequences of breaching sanctions rules…Where appropriate, HMRC will now include naming as a condition when offering a compound settlement for strategic export and sanctions offences.”

The Notice also states that such a change in approach would “ensure greater consistency with other UK sanctions enforcement bodies”. As we previously commented on in 2024, the launch of the Office of Trade Sanctions Implementation (OTSI) in October 2024 created a contradiction in UK sanctions policy regarding the disclosure of the names of offenders. OTSI now has responsibility for the civil enforcement of trade sanctions, with HMRC maintaining responsibility for criminal enforcement, but OTSI quickly signalled that it would follow the leader of its sister agency Office of Financial Sanctions Implementation (OFSI) and publicly disclose details of the relevant entities when issuing civil monetary penalty reports. That raised the possibility of companies being “named and shamed” by OTSI for less serious, civil trade sanctions breaches, but being permitted to maintain anonymity for more serious breaches capable of criminal resolution.

This announcement by HMRC follows the UK Government’s recent June 2026 tax update, in which it had promised to introduce legislation in order to “to strengthen HMRC’s ability to publish details of companies that agree a compound settlement for strategic export and sanctions offences”.

Compound settlements

The power to issue a compound settlement is derived from s.152 of the Customs and Excise Management Act 1979, and has been increasingly utilised by HMRC since Russia’s invasion of Ukraine in February 2022. Compound settlements represent an alternative to criminal proceedings, avoiding the need for costly and time-consuming contested court proceedings through an agreed sum and settlement terms.

According to HMRC guidance, compound settlements will be typically only offered in circumstances where an exporter has:

1. committed a breach that was inadvertent or due to weaknesses in internal controls; and
2. voluntarily self-reported the misconduct to HMRC.

HMRC will also only offer a compound settlement where it believes that there is sufficient evidence to prosecute: the settlement represents an outcome in lieu of criminal prosecution.

In this instance, Petrofac is stated to have breached Regulation 46Y(2)(c) by making sanctioned industrial goods available for use in Russia, and available to individuals connected to Russia. Petrofac also breached Regulation 46Z(1)(b) by providing technical assistance in respect of the goods that they made available.

One of the key attractions of compound penalties to defendant companies was the ability to retain anonymity. For instance, in July 2025, HMRC reported that the largest compound settlement for breaches of the Russia Sanctions Regulations had been agreed - for £1,160,725m – but did not give any details of the offender, nor which sector the goods related to. This latest change in approach by HMRC will therefore alter the calculation of defendant companies in trade sanctions investigations, who may now be more willing to contest cases at trial.

The Notice also provides important context on the factors that HMRC will take into account when considering whether to offer a compound settlement instead of pursuing prosecution, which are:

• the the seriousness of the alleged offence;

• whether fraudulent intent can be proven;

• the extent of the efforts to perpetrate the alleged offence;

• the type and value of any goods involved;

• the offender’s previous history;

• the extent to which the offender has co-operated with any investigation; and

• the level of financial penalties known to have been imposed by courts for similar offences.

Targeting trade

The Petrofac settlement is the latest example of an ongoing shift in the focus of sanctions enforcement, as trade sanctions have increasingly grown in prominence compared to financial sanctions. This shift can be seen in both the legislation enacted and the priorities of the sanctions enforcement agencies, and reflects the ongoing geopolitical conflict over commodities.

This year alone has seen a surge in trade-related sanctions, including a range of measures directed at Russia’s “shadow fleet”, the targeting of Iran’s overseas oil trade, and an expansion of measures designed to tackle prohibited trade in semiconductors and advanced technologies. In this climate, HMRC is taking an increasingly emboldened role as the criminal enforcer of UK trade sanctions, and now has expanded tools at its disposal to publicly target offending companies.

This article was co-authored by Trainee Solicitor, Polly Jeffery.

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