If non-compliance does arise, HMRC will use similar enforcement and inspection powers that exist across other taxes. It will also use penalties to deter non-compliance, using existing HMRC penalties as far as possible, but introducing a general penalty for any non-compliance specific to CBAM. In addition, the government will seek to align with the VAT penalty points system as far as possible for late submission of CBAM returns and late payment.

The UK also noted that consideration would be given to introducing criminal offences for fraudulent evasion of the UK CBAM.  

Source: GOV.UK

• Why is the UK introducing Carbon Border Adjustment Mechanism (CBAM)?
• Which sectors will a UK CBAM initially apply to?
• Commodity codes within scope of UK CBAM?
• Can product scope of UK CBAM be extended?
• What is Direct emissions and Indirect emissions?