The Finance Act 2009, Sections 101 and 102 (Carbon Border Adjustment Mechanism) (Interest) (Appointed Day) Order 2026
Activated late payment and repayment interest rules for the UK carbon border adjustment mechanism effective January 2027.
This Order establishes 1st January 2027 as the commencement date for standardized interest rules regarding the carbon border adjustment mechanism (CBAM).
It mandates that the late payment interest provisions in section 101 and the repayment interest provisions in section 102 of the Finance Act 2009 apply to all CBAM-related sums, including penalties.
The order applies to His Majesty's Revenue and Customs (HMRC) and any persons or entities liable for payments or entitled to refunds under the UK carbon border tax regime.
Arguments For
The order states that applying sections 101 and 102 of the Finance Act 2009 brings the carbon border adjustment mechanism (CBAM) into a harmonized interest regime managed by His Majesty's Revenue and Customs.
The document specifies that this commencement ensures late payment interest is charged on sums due to the Crown, providing a financial incentive for timely compliance.
Proponents within the Treasury framing suggest that the provision of repayment interest on sums paid by HMRC ensures equitable treatment for taxpayers who have overpaid or are owed refunds.
Arguments Against
Legal commentators may note that the effectiveness of these interest provisions depends entirely on the underlying administrative framework of the Carbon Border Adjustment Mechanism established in the Finance Act 2026.
Affected importers may express concern regarding the financial impact of late payment interest, particularly if administrative complexities in calculating carbon intensity lead to unintentional payment delays.
Critics might argue that applying generic interest provisions from 2009 to a modern environmental tax mechanism may not account for specific volatility or valuation challenges inherent in carbon pricing.
Citation
- This Order may be cited as the Finance Act 2009, Sections 101 and 102 (Carbon Border Adjustment Mechanism) (Interest) (Appointed Day) Order 2026.
This section provides the official name by which the legal instrument is to be identified.
It serves as a formal identifier for legal and administrative purposes.
Appointed Day
- 1st January 2027 is appointed as the day on which sections 101 (late payment interest on sums due to His Majesty's Revenue and Customs) and 102 (repayment interest on sums to be paid by His Majesty's Revenue and Customs) of the Finance Act 2009 come into force for the purposes of the carbon border adjustment mechanism( b ), including any penalties assessed in relation to that tax.
( b ) See Part 5 of the Finance Act 2026 (c. 11), which introduces the carbon border adjustment mechanism as a tax.
This section sets 1st January 2027 as the effective date for specific interest regulations to apply to the UK's carbon border tax.
It authorizes HMRC to charge interest on late tax payments and requires HMRC to pay interest to taxpayers on refunds or overpayments.
These rules extend to financial penalties issued in connection with the carbon border adjustment mechanism.
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