diff --git a/pkg/controller/vsphere/reconciler.go b/pkg/controller/vsphere/reconciler.go
index 5a388b0450..61fb58a483 100644
--- a/pkg/controller/vsphere/reconciler.go
+++ b/pkg/controller/vsphere/reconciler.go
@@ -882,6 +882,16 @@ func (vm *virtualMachine) reconcileTags(ctx context.Context, session *session.Se
 
 // checkAttachedTag returns true if tag is already attached to a vm
 func (vm *virtualMachine) checkAttachedTag(ctx context.Context, tagName string, m *tags.Manager) (bool, error) {
+	// cluster ID tag doesn't exists in UPI, we should skip tag attachment if it's not found
+	foundTag, err := vm.foundTag(ctx, tagName, m)
+	if err != nil {
+		return false, err
+	}
+
+	if !foundTag {
+		return true, nil
+	}
+
 	tags, err := m.GetAttachedTags(ctx, vm.Ref)
 	if err != nil {
 		return false, err
@@ -896,6 +906,26 @@ func (vm *virtualMachine) checkAttachedTag(ctx context.Context, tagName string,
 	return false, nil
 }
 
+func (vm *virtualMachine) foundTag(ctx context.Context, tagName string, m *tags.Manager) (bool, error) {
+	tags, err := m.ListTags(ctx)
+	if err != nil {
+		return false, err
+	}
+
+	for _, id := range tags {
+		tag, err := m.GetTag(ctx, id)
+		if err != nil {
+			return false, err
+		}
+
+		if tag.Name == tagName {
+			return true, nil
+		}
+	}
+
+	return false, nil
+}
+
 type NetworkStatus struct {
 	// Connected is a flag that indicates whether this network is currently
 	// connected to the VM.