The Treasury Select Committee has sent a formal notice to HM Revenue & Customs demanding answers to critical questions about how it has been enforcing trade sanctions on Russia, following a Sky News investigation into the government department.

Last month Sky News reported that while HMRC had issued six fines in relation to sanction-breaking since 2022, it would not name the firms sanctioned or provide any further detail on what they did wrong. HMRC also admitted it had no idea how many investigations it was currently carrying out into sanction-breaking.

The admissions raised questions about the robustness of Britain’s trade sanctions regime, described by government ministers as the toughest in British history.

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While the UK has introduced rules preventing the export of certain goods to Russia, banned items are still flowing into the country via third countries in the Caucasus and Central Asia. Some suspect that part of the reason these flows continue is that HMRC is not enforcing the rules as robustly as it could be.

Following Sky News’ investigation, the chair of the Treasury Select Committee (TSC), Dame Meg Hiller, has written a letter to the chief executive of HMRC, Sir Jim Harra, with 10 questions about HMRC’s conduct in the enforcement of sanctions.

Among the questions, the TSC chair asks: “Why doesn’t HMRC publish information on breaches in sanctions in a similar way to the Office for Financial Sanctions Implementation (OFSI), which gives the details of the company, how it breached sanctions and the amount of penalty issued?”

Many other countries around the world – most notably the United States – routinely “name and shame” those who break sanctions, in part as a deterrent and in part to inform other businesses about what it takes to break the rules. But HMRC instead protects the privacy of those who break sanctions.

The TSC has been scrutinising the sanctions regime in recent months, examining loopholes in the legislation and its enforcement. HMRC has been asked to respond to the letter by 17 February.

Millions of people face council tax hikes over normal thresholds after the government allowed six areas to boost rates above the usual 5%.

More than two million people will be hit by increases of between 5 and 10%.

Windsor and Maidenhead Council wanted to increase council tax by 25% but the plan was blocked – instead it will go up by 9%.

Newham Council will go up by the same amount, while Bradford Council will put up taxes by 10% and Birmingham, Somerset and Trafford councils will all put up rates by 7.5%.

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Speaking to Sky News’ Kay Burley, health and social care minister Karin Smyth defended the above normal increases – saying “many more councils” asked for permission to hike taxes, but were refused.

She said the ones given the nod “are particularly desperate” and need the money to keep “basic services running”.

The Labour MP was quick to blame the Conservatives, saying local government was left in a “really, really dark state” by the previous government.

Deputy prime minister Angela Rayner – who is also the secretary of state for local government – confirmed the move on Monday.

She said the average council tax increase across the country would not surpass last year’s total of 5.1%.

She also said more than £69bn in central funding would be made available to regional administrators, a rise of 6.8% compared to the 2024-25 period. Close to £4bn has also been put aside to help councils with social care.

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The Conservatives accused Labour of “pushing the burden on to taxpayers after they promised to freeze council tax”.

Shadow communities secretary Kevin Hollinrake said: “Their Local Government Finance Settlement will mean that councils will have to raise council tax to accommodate Labour’s jobs tax.

“This means that local people will pay more for less when it comes to local services, especially in rural areas which are losing the Rural Services Delivery Grant that Labour have abolished.

“The Labour Party have made false promises to local people, promising to freeze council tax while many councils will now have to raise it due to Labour’s political choice to raise council tax.”

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The County Councils Network, which represents 37 administrations, said they are facing pressure from the government’s decisions to increase national insurance contributions for employers, and increases to minimum wage.

Barry Lewis, the network’s finance spokesperson said: “More than four in five CCN members say they are in a worse position than before the autumn budget and this finance settlement, and one-third say their service reductions next year will now be severe.

“Considering there is very little fat left to cut from many of these services already, a further reduction will have a material impact on our residents.”

Ms Rayner confirmed allocations worth £502m to assist councils with the impact of increases to employer national insurance contributions.

China has retaliated after the US imposed 10% tariffs on its goods.

Not long after the US taxes began at 5am British time, China said it was imposing 10% tariffs on American crude oil, agricultural machinery, large-displacement cars and pickup trucks.

There will also be 15% tariffs on coal and liquefied natural gas, as well as an investigation into Google.

China also said it is imposing export controls on rare earth metals such as tungsten, tellurium, ruthenium, molybdenum and ruthenium-related items – the country controls much of the world’s supply of such metals, which are critical for the transition to clean energy.

They will not come into effect until Monday 10 February, however.

President Trump said his actions were in response to what he described as Beijing’s failure to stop the flow of fentanyl, a synthetic opioid, into the US.

Mr Trump added that the tariffs on China could just be the start, though the White House said he was due to talk to President Xi Jinping.

“China hopefully is going to stop sending us fentanyl, and if they’re not, the tariffs are going to go substantially higher,” Mr Trump said.

China has described fentanyl as America’s problem and said it would challenge the tariffs at the World Trade Organisation, as well as taking other countermeasures.

But it also left the door open for talks.

The issue of fentanyl is only one part of Mr Trump’s issue with China. He has long railed against the trade imbalance between the first and second-largest economies in the world.

Tariffs paused

Earlier, the imposition of 25% tariffs on Mexico and Canada was paused after agreements were reached on border security.

Mexico was first to make a deal with the White House. Its president, Claudia Sheinbaum, said she was sending 10,000 National Guard troops to the US border immediately in return for a tariff delay.

Mr Trump said the Mexican soldiers would be “specifically designated” to stop the flow of fentanyl into the US, as well as illegal migrants. Further negotiations will now be carried out, he added.

Ms Sheinbaum said she had a “good conversation” with him lasting at least 30 minutes just hours before the tariffs were due to begin.

She also extracted a concession from Mr Trump – after explaining the “seriousness” of high-powered weapons coming over the border from the US and getting into the hands of criminal groups.

“It gives them firepower,” she said. “We asked that the US also help our country by helping stop this arms trafficking… he agreed.”

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Canada made similar moves. Prime Minister Justin Trudeau said almost 10,000 frontline personnel “are and will be working on protecting the border”.

He added on X that his country was appointing a “fentanyl czar”, drug cartels would be listed as terrorists, and there would be “24/7 eyes on the border”.

There will also be a Canada-US joint strike force to “combat organised crime, fentanyl and money laundering”, Mr Trudeau announced.

Both Mr Trudeau and Mr Trump will view the deal as a win – Mr Trump for seemingly forcing the US’s northern neighbour to act, and Mr Trudeau for heading off sanctions with measures that for the most part (with the exception of the fentanyl czar) had already been announced in December.

Mr Trump said he was “very pleased with this initial outcome” and work will begin to see how a “Final Economic Deal” with Canada can be structured.

What is the UK situation on tariffs?

President Trump hates trade deficits, and does not want to import more goods from another country than are sent there in return, says Sky’s economics and data editor, Ed Conway.

But Britain has bigger trade deficits than the US, Conway adds, and is one of the few countries in the world to import more goods from America than America imports from it.

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In addition, because the UK is no longer part of the European Union, any tariffs imposed on Brussels will not affect London.

When asked about the UK, Mr Trump said: “I think that one can be worked out.”

Sir Keir Starmer said it was “early days”.