UK CBAM Penalties: Non-Compliance Guide

HMRC has a range of enforcement powers for CBAM non-compliance, from fixed penalties for late registration to percentage-based penalties for inaccurate returns. Understanding the penalty framework is essential for anyone managing CBAM compliance.

HMRC has indicated it will take a proportionate approach, particularly in the early years. However, intentional non-compliance or reckless under-reporting can attract significant penalties.

If you exceed the £50,000 threshold and fail to register within 30 days, you face an initial penalty. HMRC’s standard approach for registration failures involves a fixed penalty, with escalating amounts for continued non-compliance.

The registration deadline is 31 January 2028 for anyone first liable during 2027. Missing this backstop date is likely to attract attention from HMRC’s compliance team.

Filing a CBAM return after the deadline triggers a late filing penalty. The standard HMRC approach is an initial fixed penalty with additional daily penalties for extended delays. Late payment of CBAM liability attracts interest from the due date.

Interest is calculated at HMRC’s late payment interest rate, which is set quarterly. The rate is published on GOV.UK and typically aligns with Bank of England base rate plus a margin.

Filing an inaccurate return can result in a penalty calculated as a percentage of the underpaid liability. HMRC applies a behaviour-based framework:

• Reasonable care: No penalty if you took reasonable care and the error was despite this
• Careless: Up to 30% of the underpaid liability
• Deliberate but not concealed: Up to 70%
• Deliberate and concealed: Up to 100%

HMRC has stated it will consider whether you have made reasonable efforts to obtain supplier data when assessing penalties for default value usage.

Failing to keep adequate CBAM records carries a £500 fixed penalty. HMRC requires importers to retain records for six years, including import ledgers, supplier correspondence, emissions calculations, and evidence supporting any Carbon Price Relief claimed.