Will HMRC be able to cope with the administration of another tax?

That was just one of the concerns raised by the Institute in its submission to “Consultation on the introduction of a UK carbon border adjustment mechanism” (“CBAM”). The Institute’s full response can be read in the Tax Representations section of our website and also highlighted the urgent need for clarification in respect of the ongoing uncertainty as to how the EU CBAM will apply to Northern Ireland under the Windsor Framework, and specifically the application of the EU CBAM to imports from non-EU countries. 

The submission also focused on the need for adequate time to prepare for the introduction of the UK’s CBAM which must be preceded by guidance and systems that have been developed in close conjunction with stakeholders.  

HMRC’s compliance approach to this new tax should incorporate a soft landing approach with penalties automatically suspended for two years, unless HMRC has evidence of deliberate behaviour. The Institute also highlighted the importance of providing educational support to businesses and customs intermediaries.