Which penalties and powers can HM Revenue and Customs (HMRC) use for the UK Carbon Border Adjustment Mechanism (CBAM)?

HM Revenue and Customs (HMRC) will extend the use of existing powers and penalties where appropriate, including for failure to notify liability, to submit a return, to pay, errors in returns, failure to disclose tax avoidance schemes, and failure to comply with an information notice. It can also assess tax due and register an importer compulsorily.

Penalties HMRC lists

• failure to notify HMRC of liability for CBAM
• failure to submit a CBAM return
• failure to pay CBAM
• errors in CBAM returns or other documents relied upon by HMRC
• failure to disclose relevant tax avoidance schemes and serial tax avoidance
• failure to comply with an information notice

Also in the summary

• A general penalty for failure to comply with specific requirements, such as notifying HMRC when a business address changes or that a business is being carried on by another person after death, incapacity or insolvency.
• Legislation to deter the artificial separation of business activities and prevent circumvention of liability.
• Criminal offences for fraudulent evasion and deliberate misstatement of CBAM.
• If a person fails to register, or gives an incomplete or inaccurate return, HMRC will make an assessment of the CBAM due and notify the liable person.
• If a person fails to register, HMRC will be able to register them compulsorily and, if appropriate, assess the tax due.

Where a supplier's paper sits

Our reading, not HMRC's: the emissions intensity and the verification report behind it feed the return, so a wrong figure from your plant could become an error on your buyer's return. HMRC's summary does not say how a penalty would be shared with a supplier. Agree in your contract who corrects a figure and by when.

What Senseible does here

Senseible reads fuel invoices and electricity bills into dated records, which feed a plant's emissions figure. We build the figure from your records and check every figure in-house; for the UK it must then be verified by a verifier accredited for UK CBAM. Have your own verifier? Send it to them. It does not file returns or advise on penalties.

• The records penalty
• Correcting a return
• Who can verify the figure

Sources: HM Revenue and Customs, Carbon Border Adjustment Mechanism (CBAM): Policy summary (updated 2 November 2026)

Last reviewed 2026-11-05. HM Revenue and Customs says the details in its policy summary may be subject to change. Re-check the policy summary and the keeping-records page before relying on a date or condition.