Finance (No. 2) Bill (Fifth sitting) 2026-02-03

Mr Wild expressed concern about taxing zero-nicotine liquids equally with nicotine-containing products, raising questions about discouraging smokers from switching to less harmful alternatives. He also questioned the value for money of HMRC's £140 million implementation costs and the effectiveness of the duty in shifting consumer behavior.

Mr Wrigley raised concerns about vape recycling, noting that local authorities face challenges with disposing of used vape canisters. He suggested that the Government should provide funds to help local authorities manage vape waste.

Clauses 117 to 120 will introduce the new vaping duty stamp scheme. The Opposition welcome the Government’s decision to move forward with a duty stamps regime for vaping products: it is, after all, a measure that can help our enforcement agencies and responsible businesses alike to distinguish legitimate duty-paid products from those that are illegitimate and being traded illicitly and illegally.

It is a pleasure to serve under your chairship, Sir Roger. I welcome the Economic Secretary to the Treasury back from her visit to China... Duty stamps are proven anti-illicit trading measures. Digital tracking can enable supply chain monitoring...

Clauses 121 to 125 set out a framework for forfeiture and civil penalties in the new vaping duty regime. Clause 121 establishes liability to forfeiture for non-compliant goods, giving HMRC power to seize illicit products. Clause 122 introduces civil penalties for selling unstamped products, rising to £10,000 for repeated contraventions. Clause 123 creates penalties for approved stamp holders who lose stamps or fail to return them within 12 months. Clause 124 provides a broad catch-all civil penalty for non-compliance and clause 125 connects penalties with forfeiture provisions.

Concerns about the definition of 'a person' selling unstamped vaping products. Asks whether a shop assistant could face a £10,000 fine and if fines stay with individuals or businesses.

Emphasises the tough enforcement regime targeting serious non-compliance. Forfeiture powers allow seizure of vaping products from retailers selling unstamped products, ensuring penalties act as a deterrent to illicit trade. Highlights judicial processes and balance in charging accused parties. Confirms draft guidance will be shared well ahead of April 1st.

Raises concerns about proving a lack of knowledge as a defence. Asks whether the next-door premises can be used to continue illegal activities when a shop is banned.

Confirms that the enforcement mechanisms are tough due to the significant illicit vaping market in the UK. Emphasises the public interest test for prosecutions and clarifies the defence available under sections 126(3) and 127(3).

Supports HMRC's publication of information to distinguish between legal stamped products and illicit ones, but stresses the need for accuracy and accessibility in the data published.

Expresses concerns about HMRC compliance-checking methods, data safeguards, local enforcement resources, and the potential complexity of regulations. He also raises issues regarding trading standards funding disparity between counties like Norfolk and metropolitan areas.

Provides reassurance about HMRC's app for compliance checking, information flow controls, and additional funding for local authorities to ensure consistent enforcement of the new regime. She also commits to formal consultation in cases where Acts of Parliament will be changed by regulations.

Explains the core framework of CBAM, outlining its purpose and how it will apply from January 2027. He emphasises the importance of CBAM in mitigating carbon leakage and supporting the UK's path to net zero.

Intervenes to invite the Minister for a visit, highlighting the dry nature of the topic but also expressing hope that the burden on energy prices can be reduced.

Raises concerns about the impact of CBAM on fertiliser prices, farm sectors, UK food security, industrial de-industrialisation, competitive disadvantages in high-carbon sectors left out initially, and administrative burdens on businesses. Asks the Minister to provide clarity on modelled impacts, assessments, EU interactions, and practical guidance for smaller importers.

Defends the CBAM implementation as necessary to support domestic business against high-carbon imports. Explains criteria used in selecting initial sectors and commitment to review scope in future. Emphasises that CBAM will bring import prices into line with UK production costs, reducing unfair competition.

Farmers are concerned about the impact of CBAM on fertiliser prices, which has increased from £180 to £400 per tonne and could rise further due to CBAM. This will affect food prices.

Engaged with fertiliser industry before making proposal, UK-based manufacturers received free allowances covering emissions, initial impact of CBAM on fertiliser sector is expected to be modest. Agrees that group treatment for EORI numbers would confer minimal benefits and not implemented.

Welcomed the amendment clarifying baseline free allocation percentage in CBAM, discusses clauses 148-149 providing administrative and enforcement framework for CBAM. Emphasises HMRC's role in compliance.

Questions the administrative cost for mid-sized importers under new regulations, seeks clarity on prosecutorial guidance to distinguish between deliberate evasion and genuine errors. Highlights concerns over £50,000 threshold affecting small businesses.

Concerned about low £50,000 threshold impacting small importers disproportionately compared to larger firms due to compliance obligations. Proposes a 12-month transitional period for full penalties while allowing honest compliance efforts.

The clauses provide the necessary support framework to ensure CBAM's effective functioning. They include the introduction of schedule 18, key definitions and interpretive rules for part 5 of the Bill, a power for the Treasury to adjust CBAM based on linked emissions trading schemes, procedures for regulations and notices under CBAM, and commencement and transitional arrangements.

The clauses are sensible in integrating CBAM with existing tax processes but express concerns about the linkage of emissions trading schemes with EU ETS due to potential higher charges for UK businesses. He also queries on the commitment to publish draft regulations well before implementation and seeks regular updates on how the system is functioning.

This measure will allow HMRC to stop the promotion of tax avoidance and tackle the persistent group of promoters. It will ensure that taxpayers and the UK tax system are protected from the harm caused by these promoters.