(1) The Commissioners may approve an approved stamp holder to represent a person who does not have a fixed place of business in the United Kingdom.
(2) A duty stamp may, at the request of a UK representative, be issued to the UK representative by way of delivery to an overseas person.
(3) A UK representative is responsible for a stamp issued as described in subsection (2) from the point at which it is delivered to the overseas person.
(4) Section 122(3) (restriction on transfer) does not apply in relation to the transfer of a duty stamp between a UK representative and an overseas person.
(5) A UK representative who transfers a duty stamp to an overseas person remains responsible for the stamp after transfer.
(6) For the purposes of subsections (3) and (5), a person who is responsible for a stamp is also liable to penalties arising under this Part or regulations made under this Part in respect of it.
(7) The Commissioners may by regulations make provision about UK representatives, including provision—
(a) about their dealings with an overseas person and what it means to be responsible for duty stamps, and
(b) providing for exceptions to this section.
(8) In this Part—
“overseas person” means, when used in connection with a UK representative, someone in respect of whom the UK representative is approved under subsection (1);
“UK representative” means a person approved under subsection (1),
and a reference to a stamp being delivered to an approved stamp holder includes, in the case of a UK representative, a reference to a stamp being delivered to an overseas person.
(1) The following things are liable to forfeiture—
(a) an unstamped vaping product;
(b) an invalid duty stamp and any product to which an invalid duty stamp is affixed;
(c) a duty stamp that, after the end of the period of 12 months beginning with the day on which it was issued, has not been—
(i) affixed to, and activated in respect of, a vaping product, or
(ii) returned to a stamp issuer.
(2) In subsection (1)(b), an “invalid duty stamp” means—
(a) a duty stamp which has been altered after it has been issued;
(b) a document which purports to be (but is not) a duty stamp;
(c) a voided duty stamp.
(3) For things that are liable to forfeiture only in particular circumstances, see—
(a) section 128 (civil penalties);
(b) section 133 (criminal offences).
(1) A person who sells, offers for sale or otherwise deals in unstamped vaping products packaged for retail sale is liable to a penalty.
(2) The penalty under subsection (1) is the amount indicated in the table, to be determined by cross-referencing—
(a) the number of units in respect of which the penalty is imposed, and
(b) whether it is the first, second or further time that the person has been liable to a penalty under subsection (1) since the beginning of the relevant period.
1 to 99 units | 100 to 299 units | 300 to 499 units | 500 units or more
First time | £2,500 | £5,000 | £7,500 | £10,000
Second time | £5,000 | £7,500 | £10,000 | £10,000
Further time | £7,500 | £10,000 | £10,000 | £10,000
(3) For the purpose of determining a penalty under subsection (2)—
“relevant period” means the period of 24 months ending with the day on which the person becomes liable to the penalty being determined;
“unit” means an amount of vaping product packaged for individual retail sale.
(1) An approved stamp holder to whom a duty stamp is issued and delivered is liable to a penalty if—
(a) the stamp is lost, or
(b) at the end of the period of 12 months beginning with the day on which the stamp was issued, the stamp has not been—
(i) affixed to, and activated in respect of, a vaping product,
(ii) returned to a stamp issuer, or
(iii) destroyed.
(2) Subsection (1) does not apply if the stamp was lost in circumstances where the approved stamp holder—
(a) did not cause the loss, and
(b) took all reasonable steps to protect against the loss.
(3) The penalty under subsection (1) is an amount equal to five times the monetary amount specified in section 115 (excise duty: charge).
(4) The following is conduct which attracts a penalty under section 9 of FA 1994—
(a) altering a duty stamp after it has been issued;
(b) affixing an invalid duty stamp to a vaping product.
(5) In this section, an “invalid duty stamp” means—
(a) a duty stamp which has been altered after it has been issued;
(b) a document which purports to be (but is not) a duty stamp;
(c) a voided duty stamp.
(1) Failure to comply with a provision or requirement specified in subsection (2) is conduct which attracts a penalty under section 9 of FA 1994.
(2) The following provisions and requirements are specified for the purpose of subsection (1)—
(a) provision contained in this Part or regulations made under this Part;
(b) provision contained in regulations made under section 45 of TCTA 2018 insofar as it applies in relation to vaping products duty;
(c) any requirements imposed under such provision.
(1) This section applies (in addition to section 124) where a person is liable to a penalty under section 125 or 127(1).
(2) Where a person is liable to a penalty under section 125 (dealing in unstamped vaping products), any stamped vaping product—
(a) that is in the person’s possession at the time of the conduct in respect of which the liability arises, and
(b) which the Commissioners have reason to believe is owned or used in the course of a business carried out by any person,
is liable to forfeiture.
(3) Where a person is liable to a penalty for a failure of a kind described in section 127(1) (failure to comply with this Part etc), the following things are liable to forfeiture—
(a) any vaping product or duty stamp to which the failure relates, or
(b) where the failure relates to premises—
(i) any stamped vaping product found on the premises which the Commissioners have reason to believe is owned or used in the course of a business carried out by any person, and
(ii) any duty stamp found on the premises.
(1) It is an offence for a person who is not an approved stamp holder to possess a duty stamp that has not been affixed to a vaping product.
(2) It is an offence for a person to transfer a duty stamp that has not been affixed to a vaping product to another person.
(3) It is a defence for a person charged with an offence under this section to prove that they did not know, suspect or have reason to suspect that they were possessing or transferring a duty stamp that had not been affixed to a vaping product.
(4) Subsection (1) and (2) do not apply in relation to—
(a) a transfer between a UK representative and an overseas person,
(b) possession by the overseas person, or
(c) a person providing a delivery service on a commercial basis.
(5) Subsection (2) does not apply in relation to a transfer to a stamp issuer.
(1) A person who commits an offence under sections 129 to 131 is liable on summary conviction—
(a) in England and Wales, to imprisonment for a term not exceeding the general limit in a magistrates’ court, or a fine, or both;
(b) in Scotland, to imprisonment for a term not exceeding 12 months, or a fine not exceeding the statutory maximum, or both;
(c) in Northern Ireland, to imprisonment for a term not exceeding six months, or a fine not exceeding the statutory maximum, or both.
(2) A person who commits an offence under sections 129 to 131 is liable, on conviction on indictment, to imprisonment for a term not exceeding 2 years, or a fine, or both.
(1) This section applies (in addition to section 124) where a person has committed an offence under sections 129 to 131.
(2) In the case of an offence under section 129 (dealing in duty stamps), the following things are liable to forfeiture—
(a) any duty stamp in relation to which the offence is committed, and
(b) any duty stamp that is not affixed to a vaping product and that is in the person’s possession at the time the offence is committed.
(3) In the case of an offence under section 130(1) (dealing in unstamped vaping products), any stamped vaping product—
(a) that is in the person’s possession at the time the offence is committed, and
(b) which the Commissioners have reason to believe is owned or used in the course of a business carried out by any person,
is liable to forfeiture.
(4) In the case of an offence under section 130(2) or 131 (unlawful use of premises), any stamped vaping product—
(a) that is on the premises at the time the offence is committed, and
(b) which the Commissioners have reason to believe is owned or used in the course of a business carried out by any person,
is liable to forfeiture.
The Commissioners may publish information provided to HMRC under section 120(3)(b) (stamping of vaping products) for the purpose of enabling retailers, consumers and other persons to assess whether a duty stamp has been activated in respect of a vaping product.
(1) The Commissioners may disclose such information as the Commissioners consider appropriate in connection with—
(a) the Commissioners’ functions relating to vaping products duty, or
(b) the recipient’s functions relating to vaping products duty.
(2) Any person with functions relating to vaping products duty may disclose to HMRC such information as the person considers appropriate in connection with—
(a) the Commissioners’ functions relating to vaping products duty, or
(b) the person’s functions relating to vaping products duty.
(3) A person who receives information from the Commissioners as a result of this section may not—
(a) use the information for a purpose other than the purpose for which it was disclosed, or
(b) further disclose the information,
except with the consent of the Commissioners (which may be general or specific).
(4) If—
(a) a person discloses information in contravention of subsection (3)(b), and
(b) the information relates to a person whose identity is specified in, or can be deduced from, the disclosure,
section 19 of CRCA 2005 (offence of wrongful disclosure) applies in relation to that disclosure as it applies in relation to a disclosure of information in contravention of section 20(9) of that Act.
(5) Nothing in this section limits the circumstances in which information may be disclosed under section 18(2) of CRCA 2005 or under any other enactment or rule of law.
(6) In this section, a reference to the Commissioners or HMRC include a reference to anyone acting on their behalf.
(1) A local enforcement authority may investigate compliance with this Part, regulations made under this Part and regulations made under section 45 of TCTA 2018 in relation to vaping products duty, and may carry out inspections of vaping products for that purpose.
(2) In this section, “local enforcement authority” means—
(a) in Great Britain, a local weights and measures authority within the meaning of section 69 of the Weights and Measures Act 1985;
(b) in Northern Ireland, a district council.
(1) Regulations under this Part may—
(a) confer a discretion on any specified person to do anything under, or for the purposes of, the regulations;
(b) make provision by reference to things specified in a notice published in accordance with the regulations;
(c) make supplementary, incidental and consequential provision;
(d) make transitional or transitory provision and savings.
(2) A power to make regulations under this Part, or a power to exercise a discretion or publish a notice under regulations made under this Part, may be exercised—
(a) in relation to all cases to which the power extends, or in relation to those cases subject to specified exceptions, or in relation to any specified case or description of case;
(b) so as to make different provision for different purposes or areas.
(3) A notice published under this Part may be withdrawn or revised by further published notice.
(4) A power to make regulations under this Part does not restrict any power to make legislation under any other enactment relating to excise duty.
(1) Regulations under this Part must be made by statutory instrument.
(2) A statutory instrument containing regulations under this Part is subject to made affirmative procedure if it contains (whether alone or with other provision) provision that—
(a) amends an Act of Parliament,
(b) restricts any rebate of or relief from vaping products duty, or
(c) extends the cases in which vaping products are required to be stamped.
(3) Where a statutory instrument is subject to made affirmative procedure—
(a) it must be laid before the House of Commons after being made, and
(b) it ceases to have effect at the end of the period of 28 days beginning with the day on which the instrument is made, unless within that period the instrument is approved by a resolution of the House of Commons.
(4) Where a statutory instrument ceases to have effect as a result of subsection (3), that does not—
(a) affect the validity of anything previously done under the instrument, or
(b) prevent the making of a new statutory instrument.
(5) In calculating the period of 28 days for the purposes of subsection (3), no account is to be taken of any whole days that fall within a period during which—
(a) Parliament is dissolved or prorogued, or
(b) the House of Commons is adjourned for more than 4 days.
(6) A statutory instrument containing regulations under this Part is subject to annulment in pursuance of a resolution of the House of Commons if it does not contain provision of a kind described in subsection (2).
(7) Subsections (2) to (6) do not apply to regulations made under section 141 (commencement and transitional provision).
In this Part—
“activated”, in relation to a duty stamp, means linked to a particular vaping product in accordance with regulations made under section 120 and section 45 of TCTA 2018;
“approved stamp holder” means a person approved under section 122 (approved stamp holders);
“Commissioners” means the Commissioners for His Majesty’s Revenue and Customs;
“duty deferment arrangement” means provision made by or under the customs and excise Acts that permits the payment of excise duty to be deferred;
“duty stamp” has the meaning given in section 120(4);
“HMRC” means His Majesty’s Revenue and Customs;
“medicinal product” has the meaning given in the Human Medicines Regulations 2012 (S.I. 2012/1916);
“overseas person” has the meaning given in section 123(8) (United Kingdom representatives);
“retail packaging”, in relation to a product, means the packaging in which it is, or is intended to be, presented for sale by retail;
“stamp issuer” has the meaning given in section 121(4);
“stamped vaping product” means a vaping product which is stamped in accordance with this Part and regulations made under section 45 of TCTA 2018;
“tobacco product” has the meaning given in section 1 of TPDA 1979;
“UK representative” has the meaning given in section 123(8);
“unstamped vaping product” means a vaping product which is required to be stamped in accordance with this Part and regulations made under section 45 of TCTA 2018, but is not so stamped;
“vape” means a device that vaporises substances for the purpose of inhalation through a mouthpiece;
“vaping product” has the meaning given in section 116(1) (but see subsection (2));
“vaping products duty” has the meaning given in section 115(3).
(1) Section 115 comes into force on 1 October 2026.
(2) Section 115 has effect in relation to vaping products that—
(a) were produced in, or imported into, the United Kingdom before 1 October 2026, and
(b) are stamped (see section 120(2)),
as though they were produced in, or imported into, the United Kingdom on 1 October 2026.
(3) Sections 117(4) (production only in accordance with regulations) and 120(1) (duty to stamp in accordance with regulations) come into force on such day as the Treasury may by regulations appoint.
(4) Section 129 comes into force two months after this Act is passed.
(5) Sections 130 and 131 (dealing in unstamped vaping products and sales ban) come into force on 1 April 2027, and have effect in relation to vaping products irrespective of when they were produced or imported.
(6) The Treasury may by regulations provide that, for a specified period, this Part has effect as though—
(a) a reference to a duty stamp includes a reference to a transitional duty stamp;
(b) in section 122(3) the words “and activated in respect of” were omitted;
(c) sections 124(1)(c) and 126(1)(b) were omitted.
(7) Regulations under subsection (6) may—
(a) define “transitional duty stamp”;
(b) make further provision about the specified period and transitional duty stamps.
(8) The Treasury may by regulations provide that, for a specified period, this Part has effect as though a reference to an approved stamp holder or UK representative is a reference to a person being approved or treated as an approved stamp holder or UK representative.
(9) Regulations under subsection (8) may make provision about when a person is to be treated as an approved stamp holder or UK representative.
(10) The Treasury may by regulations extend a period specified in regulations under this section.
(11) Regulations under subsection (7)(b) may include provision imposing penalties and for forfeiture.
(12) A statutory instrument containing regulations under this section is subject to annulment in pursuance of a resolution of the House of Commons.
(1) A tax called the carbon border adjustment mechanism (“CBAM”) is to be charged in accordance with this Part.
(2) In this Part—
(a) sections 143 to 150 and Schedule 16 set out the charge to CBAM (and include exemptions and relief);
(b) section 151 and Schedule 17 provide for the administration and enforcement of CBAM;
(c) section 152 and Schedule 18 provide for criminal offences relating to CBAM;
(d) sections 153 to 158 and Schedule 19 make general provision.
(1) CBAM is charged on the emissions embodied in a CBAM good when the good is imported into the United Kingdom.
(2) In this Part, “CBAM good” means a good specified by Schedule 16 (but see section 145(3)).
(3) Schedule 16 specifies the following kinds of goods—
(a) aluminium goods;
(b) cement;
(c) fertilisers;
(d) hydrogen;
(e) iron and steel goods.
(1) For the purposes of this Part, a reference to a good being imported into the United Kingdom is a reference to—
(a) the first time a good is imported as described in this section, and
(b) if a good is imported as described in this section and subsequently exported from the United Kingdom, the next time the good is imported as described in this section.
(2) If a CBAM good is chargeable to import duty under section 1 of TCTA 2018, it is imported when liability to import duty is incurred in respect of the good.
(3) If a CBAM good is chargeable to duty under section 30C of TCTA 2018, it is imported when liability to that duty is incurred in respect of the good.
(4) If a CBAM good is chargeable to duty under section 30A(3) or 40A(1)(a) of TCTA 2018 (or would be so chargeable but for regulations within section 30B(1)(a) or 40B(1)(a) of that Act), it is imported when liability to that duty is incurred in respect of the good (or would be incurred but for the regulations).
(5) If a CBAM good is—
(a) a Union good that is imported into the United Kingdom as a result of its entry into Northern Ireland and not excluded by regulations made by the Treasury,
(b) a good that is imported into the United Kingdom from the Isle of Man and not excluded by regulations made by the Treasury,
(c) a domestic good by virtue of regulations made under section 33(8) of TCTA 2018 relating to goods declared for an outward processing procedure, or
(d) a domestic good by virtue of subsection (6) of section 36 of TCTA 2018 or regulations made under that section,
it is imported at the time of importation for the purposes of the customs and excise Acts.
(6) If a CBAM good would be chargeable to duty under section 30C of TCTA 2018 but for regulations within subsection (6)(a) of that section, it is imported at the time of entry of the good in Great Britain in the course of the removal of the good to Great Britain from Northern Ireland.
(7) The reference in subsection (4) to when liability to duty under section 30A(3) or 40A(1)(a) of TCTA 2018 is incurred in respect of a good is to when, for the purpose of the duty, a customs debt on import is incurred under UCC 2013.
(8) For the purposes of determining, in accordance with subsection (5), when a CBAM good is imported into the United Kingdom from the Isle of Man, section 8 of the Isle of Man Act 1979 (removal of goods from the Isle of Man) has effect as if, in subsection (2) of that Act, at the end of paragraph (c), there were inserted
; or
(d) goods which are CBAM goods.
(9) Section 5 of CEMA 1979 applies for the purpose of subsection (6) to determine the time of entry of a CBAM good in Great Britain in the course of the removal of the good to Great Britain from Northern Ireland as it applies for the purpose of the customs and excise Acts to determine the time of importation of goods—
(a) reading references in that section to the time of importation of goods as the time of entry of the CBAM good in Great Britain, and
(b) reading references in subsections (2) and (6) of that section to the United Kingdom as Great Britain.
(10) Regulations made by the Treasury may exclude from subsection (4) or (6) (as the case may be) goods that would be chargeable to duty under section 30A(3), 30C or 40A(1)(a) of TCTA 2018 but for regulations within section 30B(1)(a), 30C(6)(a) or 40B(1)(a) of that Act.
145 Goods processed under a special customs procedure
(1) Subsection (2) applies where—
(a) a CBAM good has been declared for a special customs procedure,
(b) the CBAM good is processed under the procedure,
(c) the processing produces a good that is not a CBAM good, and
(d) that good is imported into the United Kingdom.
(2) When the good that is not a CBAM good is first imported as described in section 144, CBAM is charged on so much of the emissions embodied in that good as were embodied in the CBAM good when it was declared for the special customs procedure.
(3) References in this Part to a CBAM good include a reference to a good imported in the circumstances described in subsection (1).
(4) In this section, “special customs procedure” means—
(a) a special Customs procedure (within the meaning of section 3(4) of TCTA 2018);
(b) a special procedure provided for by Title 7 of UCC 2013, other than the outward processing procedure.
(1) The person liable to CBAM on the emissions embodied in a CBAM good is the importer.
(2) If a CBAM good is imported as described in section 144(2), (3) or (6), the importer is—
(a) if liability to import duty, or duty under section 30C of TCTA 2018, is incurred when a declaration for a Customs procedure is accepted, or when there is a breach of a requirement relating to the procedure—
(i) the person in whose name the declaration for the procedure was made, or
(ii) if the declaration was made on behalf of another person, the person on whose behalf the declaration was made, or
(b) if paragraph (a) does not apply, the person on whose behalf the good is imported.
(3) If a CBAM good is imported as described in section 144(4), the importer is—
(a) if liability to duty under section 30A(3) or 40A(1)(a) of TCTA 2018 is incurred when a Union customs declaration in respect of the good is accepted, or when there is a breach of a requirement relating to the procedure for which it is accepted—
(i) the declarant, or
(ii) if the declaration was made on behalf of another person, the person on whose behalf the declaration was made, or
(b) if paragraph (a) does not apply, the person on whose behalf the good is imported.
(4) If a CBAM good is imported as described in section 144(5), the importer is the person on whose behalf the good is imported.
(5) In this section—
“Customs procedure” means a procedure set out in section 3(3) of TCTA 2018;
“declarant”, in relation to a Union customs declaration, has the meaning given by Article 5(15) of UCC 2013;
“Union customs declaration” means a customs declaration for the purposes of UCC 2013.
(1) CBAM is not charged on the emissions embodied in a CBAM good if the importer—
(a) is, at the time the good is imported, neither registrable nor registered (see Part 2 of Schedule 17), or
(b) is importing the good otherwise than in the course of a business.
(2) CBAM is not charged on the emissions embodied in a CBAM good if—
(a) the place of origin of the good is the United Kingdom, determined in accordance with provision applicable in relation to the customs tariff in its standard form (see section 17(1) to (6) of TCTA 2018);
(b) the good is imported as described in section 144(2) or (3) and returned goods relief is available in respect of the good;
(c) the good is imported as described in section 144(4) and relief under Article 203 of UCC 2013 (returned goods) is available in respect of the good;
(d) the good is within section 144(5)(a) and was—
(i) exported from the United Kingdom as a Union good as a result of its removal from Northern Ireland, and
(ii) imported into the United Kingdom as described in section 144(5)(a) not more than 3 years later, in the state in which it was exported (see Article 203(5) of UCC 2013);
(e) the good is imported as described in section 144(5)(b) and returned goods relief would be available in respect of it if liability to import duty were incurred by reference to its importation into the United Kingdom.
(3) CBAM is not charged on so much of the emissions embodied in a CBAM good (“the chargeable good”) as are attributable to the production of another CBAM good which—
(a) originated from the United Kingdom, determined in accordance with provision applicable in relation to the customs tariff in its standard form (see section 17(1) to (6) of TCTA 2018), and
(b) was processed to produce the chargeable good.
(4) If, but for this subsection, a liability to duty would have been incurred for the purposes of section 144(2) or (3) in circumstances where—
(a) liability to duty was incurred in accordance with section 4(4)(a) of TCTA 2018,
(b) liability to duty was incurred by virtue of HMRC accepting a declaration of the good for a temporary admission procedure, and
(c) full relief was given from the liability to duty incurred,
the liability to duty is treated as not having been incurred on that occasion for the purposes of section 144(2) or (3) (and, accordingly, the good is treated as not having been imported as described in section 144(2) or (3) on that occasion).
(5) But subsection (4) does not apply if—
(a) there was no entitlement to make the declaration mentioned in subsection (4)(b), or
(b) the full relief given, mentioned in subsection (4)(c), was not available.
(6) The Treasury may by regulations specify other circumstances in which CBAM is not charged on emissions, or certain emissions, embodied in a CBAM good.
(7) Regulations under subsection (6) may also treat an importation into the United Kingdom, for any purpose of this Part, of a CBAM good in respect of which the regulations apply as not having occurred (including by virtue of provision similar to subsection (4)).
(8) In this section—
“customs tariff in its standard form” means the customs tariff, as defined in section 8 of TCTA 2018, as it has effect without regard to any provision made under sections 9 to 15 or section 19(4) of that Act;
“returned goods relief” means relief for import duty available—
by virtue of the UK Reliefs document, and
by reference to the fact the good is being returned to the United Kingdom, or Great Britain, having previously been exported;
“temporary admission procedure” has the meaning given by paragraph 15 of Schedule 2 to TCTA 2018;
“UK Reliefs document” has the meaning given by regulations under section 19 of TCTA 2018.
(1) In this Part, “emissions embodied in a CBAM good” means emissions that are attributable to the production of a CBAM good.
(2) The Treasury may by regulations make provision about what it means for emissions to be attributable to the production of a CBAM good.
(3) Regulations under subsection (2) may (among other things) make provision about emissions that are emitted in the course of an activity carried out in connection with the production of—
(a) a CBAM good, or
(b) materials used (including goods processed) to produce a CBAM good.
(4) See paragraphs 10 and 11 of Schedule 17 for provision about how to determine and evidence emissions embodied in a CBAM good.
(1) CBAM is charged at an amount equal to the sectoral domestic price applicable in respect of the CBAM good multiplied by the number of tonnes of carbon dioxide equivalent emissions embodied in the CBAM good.
(2) The “sectoral domestic price” applicable in respect of a CBAM good is the price calculated and published by the Treasury for—
(a) the CBAM sector in which the good falls, and
(b) the quarter in which the liability to CBAM is incurred in respect of the good.
(3) The Treasury must calculate and publish the sectoral domestic price for each CBAM sector for each quarter (“quarter Q”) as follows—
Step 1
Calculate the average price per tonne of specified emissions under the UK Emissions Trading Scheme in the quarter preceding quarter Q—
by reference to auction clearing prices for UK ETS allowances at auctions during the quarter preceding quarter Q, or
if no allowances were sold at auction during that quarter, as provided in regulations under subsection (6).
Step 2
Reduce that price by a percentage equal to the baseline free allocation percentage for the CBAM sector, as adjusted by a factor specified by regulations under subsection (6)—
for the CBAM sector for the year in which quarter Q falls, and
in light of reduction factors applicable in determining, under the UK Emissions Trading Scheme, the allocation in that year of free UK ETS allowances in respect of sub-installations that have a process that serves production of goods falling within the CBAM sector.
(4) In this section—
“auction” means an auction under the Greenhouse Gas Emissions Trading Scheme Auctioning Regulations 2021 (S.I. 2021/484);
“auction clearing price”, in relation to a UK ETS allowance, has the same meaning as in those Regulations (see regulation 7);
“baseline free allocation percentage” means, in relation to a CBAM sector, the average percentage of sectoral emissions that were covered—
in the 2019 scheme year, by free EU ETS allowances, and
in the 2022 and 2023 scheme years, by free UK ETS allowances,
allocated in the scheme years mentioned here in respect of sub-installations that have a process that serves the production of goods falling within the CBAM sector;
“CBAM sector” means the commodity codes set out under a single heading in the Table in Schedule 16 other than the commodity codes that the Table indicates are excepted;
“the ETS Regulations” means the Greenhouse Gas Emissions Trading Scheme Regulations 2012 (S.I. 2012/3038);
“free EU ETS allowance” means an allowance allocated free of charge in accordance with Directive 2003/87/EC of the European Parliament and of the Council establishing a scheme for greenhouse gas emissions allowance trading within the Community and amending Council Directive 96/61/EC;
“free UK ETS allowance” means an allowance allocated free of charge under Part 4A of the UK ETS Order;
“quarter” means a period of 3 months ending at the end of March, June, September or December;
“regulated activity” and “specified emissions” have the meaning given by paragraph 3 of Schedule 2 to the UK ETS Order (or, in relation the 2019 scheme year, given by regulation 3 of the ETS Regulations as it had effect during that year);
“scheme year” has the meaning—
in relation to the 2019 scheme year, given by regulation 3 of the ETS Regulations;
in relation to the 2022 and 2023 scheme years, given by article 4 of the UK ETS order;
“sectoral emissions” means, in relation to a CBAM sector, the specified emissions that were emitted in the course of regulated activities carried out at sub-installations in the United Kingdom that have a process that serves the production of goods falling within the CBAM sector;
“sub-installation” means each kind of sub-installation defined by Article 2 of Commission Delegated Regulation (EU) 2019/331 determining transitional Union-wide rules for harmonised free allocation of emission allowances pursuant to Article 10a of Directive 2003/87/EC of the European Parliament and of the Council (or, in relation to the 2019 scheme year, has the meaning given by regulation 3 of the ETS Regulations as it had effect during that year);
“UK ETS allowance” means an allowance created under the UK ETS Order (see article 18);
“UK ETS Order” means the Greenhouse Gas Emissions Trading Scheme Order 2020 (S.I. 2020/1265).
(5) In determining the “baseline free allocation percentage” in relation to a CBAM sector, ignore any scheme year in which there were no sectoral emissions.
(6) The Treasury may by regulations make further provision about the calculation of the sectoral domestic price.
(7) In this section—
(a) references to a good falling within a CBAM sector are references to the good falling within one of the commodity codes comprising the sector;
(b) references to emissions are references to tonnes of carbon dioxide equivalent emissions;
(c) references to regulated activities carried out to produce goods include regulated activities consisting in the production of heating and cooling consumed during the regulated activities.
(1) The amount of CBAM charged on emissions may be reduced under this section if another monetary amount is payable in relation to the emissions, whether the amount is—
(a) in the form of taxation,
(b) in exchange for allowances (however expressed) under an emissions trading scheme, or
(c) required to be paid under the law of a country or territory in connection with the importation of goods into the country or territory.
(2) The Treasury may by regulations make provision about relief under this section, including provision—
(a) describing which monetary amounts may generate relief,
(b) about when a monetary amount is to be treated as being payable in relation to emissions, and how the emissions are to be identified, and
(c) about determining the amount of relief.
(3) In this Part, “carbon price” means a monetary amount of a kind described in regulations under subsection (2)(a).
(4) Regulations under subsection (2) may (among other things) make provision—
(a) for the amount of relief to be determined by reference to averages, estimates, assumptions or by reference to information provided by a third party;
(b) to take account of other reliefs, allowances, offsets or similar relating to a carbon price;
(c) about cases where two or more carbon prices are payable in relation to the same emissions;
(d) for the amount of relief to differ depending on where the carbon price is payable;
(e) specifying periods by reference to which calculations or measurements are to be made.
(5) In this section, references to an amount being payable in relation to emissions includes a reference to—
(a) an amount that indirectly relates to emissions, and
(b) an amount having been payable, or that is going to become payable, in relation to emissions.
(1) In this Part, “emissions” means emissions of greenhouse gases (within the meaning of section 92 of the Climate Change Act 2008) into the atmosphere that are attributable to human activity.
(2) For the purposes of this Part, “emissions” are determined or expressed in tonnes of carbon dioxide equivalent.
(3) In this Part, a “tonne of carbon dioxide equivalent” means one metric tonne of carbon dioxide or an amount of any other greenhouse gas with an equivalent global warming potential.
(4) The Commissioners may by regulations make provision setting, or about the determination of, such amounts.
(1) In this Part—
“business” includes any activity of a government department or other public authority, or of a charity, that is carried out for commercial purposes;
“CBAM good”: see section 143;
“the Commissioners” means the Commissioners for His Majesty’s Revenue and Customs;
“the customs and excise Acts” has the meaning given by section 1 of CEMA 1979;
“emissions”: see section 154;
“HMRC” means His Majesty’s Revenue and Customs;
“import”: see section 144;
“import duty” has the meaning given by section 1 of TCTA 2018;
“importer”: see section 146;
“registered person” and “registrable person”: see paragraph 2(10) of Schedule 17;
“tonne of carbon dioxide equivalent” see section 154;
“UCC 2013” means Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 laying down the Union Customs Code, as it has effect by virtue of section 7A of the European Union (Withdrawal) Act 2018;
“UK Emissions Trading Scheme” has the meaning given in Article 16 of the Greenhouse Gas Emissions Trading Order 2020 (S.I. 2020/1265);
“Union good” has the meaning given by Article 5(23) of UCC 2013;
“working day” means any day other than—
a Saturday or Sunday, or
a day that is a bank holiday in any part of the United Kingdom under the Banking and Financial Dealings Act 1971.
(2) In this Part—
(a) a person imports a CBAM good only if the person is “the importer” of the good (within the meaning of section 146);
(b) references to the production of goods include the manufacture of goods;
(c) references to the processing of goods have the same meaning as in TCTA 2018 (see section 37(4) of that Act).
(3) The Treasury may by regulations make such amendments to this Part as they consider appropriate in consequence of UCC 2013, or any legislation replacing it, being amended or replaced.
156 Power to make provision for linked emissions trading schemes
(1) The Treasury may by regulations amend this Part for the purpose of—
(a) excluding emissions embodied in goods that originate from a country or territory with a linked emissions trading scheme from the charge to CBAM;
(b) providing that such goods are to be disregarded when calculating the aggregate value of imports for the purposes of Part 2 of Schedule 2 (registration).
(2) In this section, “a country or territory with a linked emissions trading scheme” means—
(a) a country or territory that has entered into arrangements with the United Kingdom for the purpose of linking its emissions trading scheme with the UK Emissions Trading Scheme, or
(b) a country or territory that has entered into arrangements with a country or territory of a kind referred to in paragraph (a) for the purpose of linking its emissions trading scheme with that country or territory’s emissions trading scheme.
(1) Regulations under this Part—
(a) may make different provision for different purposes;
(b) may include incidental, consequential, supplementary or transitional provision.
(2) Regulations under this Part may make provision by reference to things specified in a notice that is—
(a) published by the Treasury or the Commissioners in accordance with the regulations, and
(b) not withdrawn by a further notice.
(3) Regulations under this Part are to be made by statutory instrument.
(4) A statutory instrument containing regulations under section 156(1) (linked emission trading schemes) is subject to the affirmative procedure.
(5) A statutory instrument containing regulations under any of the following provisions is subject to the made affirmative procedure—
(a) section 149(6) (rate of CBAM);
(b) section 150(2) (carbon price relief);
(c) paragraph 47 of Schedule 17 (amount of penalties).
(6) A statutory instrument containing regulations under paragraph 2(3) of Schedule 16 and under section 8 of TCTA 2018 is subject to the procedure under section 32 of TCTA 2018 that applies by virtue of the instrument containing regulations section 8 of TCTA 2018.
(7) A statutory instrument containing regulations under this Part, other than regulations in respect of which subsection (4), (5) or (6) applies, is subject to the negative procedure.
(8) Subsection (7) does not apply to a statutory instrument containing only regulations under section 158 (transitory provision).
(9) Where a statutory instrument is subject to the affirmative procedure, it may not be made unless a draft of the instrument has been laid before and approved by a resolution of the House of Commons.
(10) Where a statutory instrument is subject to the made affirmative procedure—
(a) it must be laid before the House of Commons after being made, and
(b) it ceases to have effect at the end of the period of 28 days beginning with the day on which the instrument is made, unless within that period the instrument is approved by a resolution of the House of Commons.
(11) Where a statutory instrument is subject to the negative procedure, it is subject to annulment in pursuance of a resolution of the House of Commons.
(12) Where a statutory instrument ceases to have effect as a result of subsection (10), that does not—
(a) affect the validity of anything previously done under the instrument, or
(b) prevent the making of a new statutory instrument.
(13) In calculating the period of 28 days for the purposes of subsection (10), no account is to be taken of any whole days that fall within a period during which—
(a) Parliament is dissolved or prorogued, or
(b) the House of Commons is adjourned for more than 4 days.
(14) Any provision that may be included in regulations in a statutory instrument under this Part subject to the negative procedure may be included in regulations in a statutory instrument subject to the affirmative procedure or the made affirmative procedure.
(15) Any provision that may be included in regulations in a statutory instrument under this Part subject to the made affirmative procedure may be included in regulations in a statutory instrument subject to the affirmative procedure.
(16) A notice published by the Treasury or the Commissioners under this Part—
(a) may be amended or withdrawn by a further notice;
(b) may include provision mentioned in subsection (1)(a) and (b).
(1) This Part has effect in relation to goods imported into the United Kingdom on or after 1 January 2027.
(2) The Treasury may by regulations modify the effect of—
(a) paragraph 2(4) of Schedule 17 as regards any person who triggers registration in 2027 or 2028;
(b) paragraph 6(2) or (3) or 7(2) for the purposes of any accounting period in respect of CBAM falling in 2027 or 2028.
(3) Provision included in regulations under this section by virtue of section 157(1)(b) may modify the effect of any enactment.
159 Prohibition of promotion of certain tax avoidance arrangements
(1) A person must not promote arrangements that—
(a) have been, or are likely to be, marketed as a means by which a person may seek a particular tax advantage if there is no realistic prospect that the arrangements will result in the tax advantage, or
(b) are of a kind specified in regulations under subsection (2).
(2) The Commissioners may by regulations specify arrangements that in the reasonable opinion of the Commissioners—
(a) have been, or are likely to be, marketed as a means by which a person may seek a particular tax advantage,
(b) are unlikely to result in the tax advantage, and
(c) are likely to cause harm to participants.
(3) The following factors would, for example, indicate that arrangements are likely to cause harm to participants—
(a) a large number of participants;
(b) participants that are not independently advised;
(c) participants with otherwise straightforward tax affairs;
(d) mass-marketing;
(e) standardised implementation documents;
(f) promoters that are unknown to, or not able to be contacted by, participants.
(4) Regulations under subsection (2) may specify arrangements by—
(a) describing—
(i) some or all of the steps to be taken by participants or other persons;
(ii) the tax advantage sought;
(iii) the marketing;
(iv) characteristics of participants;
(b) providing examples or illustrations;
(c) such other means as the Commissioners consider appropriate.
(5) It does not matter for the purposes of this section whether a person knows, or has reason to believe, that the arrangements fall within subsection (1).
(1) For the purposes of section 159, a person promotes arrangements if, in the course of a business or with a view to monetary gain, the person—
(a) communicates information with a view to encouraging another person to implement the arrangements or part of the arrangements,
(b) makes the arrangements available for implementation by another person,
(c) in circumstances where the arrangements have been implemented by another person, organises or manages any aspect of the arrangements, or
(d) arranges (whether directly or indirectly) for another person or persons to take the steps above.
(2) A person does not promote arrangements merely by—
(a) providing goods or services on commercial terms in circumstances where the person does not know, and could not reasonably be expected to know, that the goods or services are being procured or used for the purposes of arrangements falling within section 159(1) (prohibition of promotion), or
(b) providing legally privileged advice or legally privileged information.
(3) For the purposes of subsection (2)(b), advice or information is legally privileged if a claim to legal professional privilege, or (in Scotland) to confidentiality of communications as between client and professional legal adviser, could be maintained in respect of it in legal proceedings.
(1) Regulations under section 159(2) are to be made by statutory instrument.
(2) A statutory instrument containing regulations under section 159(2) must be laid before the House of Commons after being made.
(3) Regulations contained in a statutory instrument laid before the House of Commons under subsection (2) cease to have effect at the end of the period of 28 days beginning on the day on which the instrument is made unless, during that period, the instrument is approved by a resolution of the House of Commons.
(4) In calculating the period of 28 days, no account is to be taken of any whole days that fall within a period during which—
(a) Parliament is dissolved or prorogued, or
(b) the House of Commons is adjourned for more than four days.
(5) If the regulations cease to have effect as a result of subsection (3), that does not—
(a) affect the validity of anything previously done under the regulations, or
(b) prevent the making of new regulations.
(1) A person who promotes arrangements in breach of section 159(1) is liable to a penalty.
(2) The maximum penalty under this section is the sum of—
(a) £1,000,000, and
(b) £5,000 for each person who participated in the arrangements.
(3) Before imposing a penalty under this section, an authorised officer of Revenue and Customs must—
(a) notify the person of the fact that the authorised officer considers subsection (1) to apply, and
(b) allow the person 30 days from the date of notification to make representations to HMRC.
(4) In imposing a penalty under this section, an authorised officer of Revenue and Customs must have regard to—
(a) the number of persons participating, or targeted to participate, in the arrangements,
(b) the amount of tax that was likely at risk in connection with the arrangements,
(c) whether and to what extent the person cooperated with HMRC, and
(d) whether the wrongdoing was repeated, or continued over an extended period.
(5) A penalty imposed under this section is to be treated as a penalty determined under section 100(1) of TMA 1970.
(6) A penalty imposed under this section is to carry interest in accordance with section 101 of FA 2009.
(7) A person is not liable to a penalty under this section in respect of anything for which the person has been convicted of an offence.
(8) In paragraph 5(6) of Schedule 13 to FA 2020 (joint and several liability of company directors etc) after paragraph (f) insert—
(g) section 162 of FA 2026 (prohibition of promotion of certain tax avoidance arrangements: penalties).
(1) A person who promotes arrangements in breach of section 159(1) commits an offence.
(2) A person who commits an offence under this section is liable—
(a) on summary conviction, to—
(i) in England and Wales, a fine, or
(ii) in Scotland or Northern Ireland, a fine not exceeding the statutory maximum, or
(b) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or both.
(1) If an offence under section 163 is committed by a body corporate or a partnership and—
(a) is committed with the consent or connivance of a responsible person, or
(b) is attributable to the neglect of a responsible person,
the responsible person commits the offence (as well as the body or partnership).
(2) A “responsible person” means—
(a) in relation to a body corporate other than one whose affairs are managed by its members—
(i) a director, manager, secretary or other similar officer of the body, or a person purporting to act in such a capacity, or
(ii) a shadow director within the meaning given in section 251 of the Companies Act 2006;
(b) in relation to a limited liability partnership or other body corporate whose affairs are managed by its members—
(i) a member exercising management functions, or purporting to do so, or
(ii) in the case of a limited liability partnership, a shadow member;
(c) in relation to a partnership, a partner or a person purporting to act in that capacity.
(3) In this section, a “shadow member” means a person in accordance with whose directions or instructions the members of the limited liability partnership are accustomed to act, save that a person is not a shadow member by reason only of the fact that the members act on advice given by that person in a professional capacity.