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Carbon Border Adjustment Mechanism (CBAM) and new iron & steel controls from 30 September 2023

There are two important changes coming into effect from 30 September, if you:

  1. Import certain iron or steel products from any country
  2. Export certain iron or steel products to the EU
  3. Supply certain iron or steel products, aluminium, cement, fertilisers, electricity or hydrogen

Iron and steel prohibitions and evidence – third party Russian content

On 30 September 2023 a UK ban comes into place which extends existing sanctions on Russian iron and steel products.  If you are involved with importing or exporting iron or steel products which fall within Chapters 72 and 73 you need to take action now.

Detailed evidence and documents must be ready to make available to HMRC to confirm that the ban does not apply.  You will need to obtain this evidence from your suppliers.

Any affected business that cannot provide evidence to HMRC, which may be requested at the time of import or afterwards, risks their goods being seized and criminal penalties.

Similar prohibitions will take effect on goods exported from the UK to the EU and the EU importer will require similar supply chain evidence from UK suppliers.

Goods affected

The specific goods affected are listed in Schedule 3B of the Russia (Sanctions)(EU Exit) Regulations 2019, all fall within Chapters 72 and 73 of the UK tariff.  These include iron and steel in various forms and articles made from iron and steel including parts for buildings, wires, chains, screws, bolts and washers.

UK importers must check that such imports from any third country do not contain any Schedule 3B goods of Russian origin.

Specifically, the goods affected by the ban:

  • are listed in Schedule 3B of the Russia Sanctions Regulations
  • have been “altered, transformed in any way; or subjected to any type of operation or process” in a third country, and
  • incorporate one or more Schedule 3B iron and steel product/products of Russian origin.
New documentary requirements for all importers of iron and steel items

If you import these Schedule 3B goods you need to gather the following evidence from your suppliers:

  • the country of origin of the iron and steel products processed in the third country (or third countries) after the fact
  • the date that the iron and steel product left its country of origin
  • the country(s) and facility(s) where processing has taken place
  • a Mill Test Certificate (MTC)

MTCs will be an important piece of evidence and importers of these items should request and obtain them from overseas suppliers now to ensure continuity of trade.

EU importers will almost certainly require a MTC or alternative evidence from UK exporters of qualifying iron and steel articles.

    1. Chinese origin hot rolled coils of alloy steel (HS 7225 – 7226, within Schedule 3B) are purchased and imported by a UK manufacturer.  The goods are listed as CN (Chinese) origin at import as major processing took place in China.  However, the coils of alloy steel were made using Russian origin steel slabs (HS 7207, Schedule 3B goods) that the Chinese manufacturer had originally purchased from a Russian supplier.  This import will be prohibited from entry to the UK as both the Russian steel slabs and the Chinese coils fall under Schedule 3B goods.
    2. Some pig iron (HS 7201, not within Schedule 3B) leaves Russia and is then processed in China into slabs (HS 7207, Schedule 3B goods).  These Chinese origin slabs are imported into the UK.  This import will not be prohibited from entry to the UK as although the pig iron used to make the slabs is Russian, it does not fall under Schedule 3B.

EU Carbon Border Adjustment Mechanism (CBAM)

New EU rules will introduce additional record keeping obligations on UK businesses, also from 30 September 2023.

This affects UK businesses which supply the following:

  • Iron and steel
  • Cement
  • Aluminium
  • Fertilisers
  • Electricity
  • Hydrogen

 EU importers of these products will need information from their suppliers relating to the ‘Embedded Emissions’ in the goods themselves.

Even if you do not export directly to the EU, if you are involved in the production or manufacture of any of the above and they are ultimately imported into the EU, you will be expected to share greenhouse gas emissions data subject to EU calculation standards within your supply chain.

From 1 January 2026 the EU importers may be subject to paying a carbon tax on these imports so UK exporters need to keep this in mind.  In an effort to reach the UK’s carbon net zero goals, the UK Government is also considering a package of potential measures to reduce carbon leakage including CBAM so similar reporting and tax obligations may impact UK businesses importing in these sectors.

If you would like to understand more about how your business may be affected, please contact Mike Frost or Kathryn Jenkins

FEATURING: Kathryn Jenkins
Kathryn is a VAT and Customs professional with almost 20 years’ experience predominantly working in VAT.  She gained her experience from HMRC and originally joined… read more
Mike is an Indirect Tax Consultant specialising in Customs Duty and International Trade. He assists clients with solutions to all manner of customs queries and… read more
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