ICAEW supportive of UK carbon border adjustment mechanism proposal

ICAEW is broadly supportive of the proposals contained within the consultation by HM Treasury and HM Revenue & Customs on the introduction of a UK carbon border adjustment mechanism (CBAM), it said in its response.

ICAEW said the proposed approach to implementing the UK’s CBAM was sensible, however the timelines for compliance may be overly ambitious for many businesses, particularly small ones, and transition periods should be longer.

In the response, ICAEW proposes a more gradual transition, with six-month reporting periods in year two to allow businesses additional time to adapt to the new requirements. It highlighted two key areas of concern, namely, that the five-month deadline after the first accounting period may be too short for obtaining accurate emissions data from global supply chain; and that moving to quarterly reporting periods from 2028 could pose a significant administrative burden for businesses.

Ed Saltmarsh, ICAEW Technical Manager, VAT and Customs said:

“While we support the initiative to introduce a UK CBAM, it’s crucial that the challenges that businesses will face to comply with the rules are recognised. We are therefore calling for an extended transition to ensure businesses have more time to adjust. Compiling accurate emissions data from global supply chains is a complex task and we believe a more phased approach, with longer reporting periods initially, will mitigate potential compliance risks and administrative burdens.

“Our goal is to ensure that the implementation of CBAM is effective in addressing carbon leakage but also manageable for businesses of all sizes.”

ENDS

About ICAEW

Chartered accountants are talented, ethical and committed professionals. ICAEW represents more than 208,000 members and students around the world.

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