Can Authorised Economic Operator (AEO) Status help you?
From 1st January 2021, it is likely that all EU countries will be treated in the same way as non-EU countries for VAT and Customs Duty purposes. The most important thing for a UK business, especially in this challenging economic environment, is to be able to continue trading with other EU countries without any extra hassle and delays.
At the time of writing we do not yet know whether the UK will have concluded a trade deal with the EU before 31 December 2020. If there is no deal, importing or exporting goods from/to the EU will have additional complexity which includes documentations, goods checking etc. It could delay delivery of goods which could lead to significant cash flow problems for some businesses.
However, there are a few procedures which can help businesses dealing with international suppliers smoothly. One of them is AEO.
What is AEO?
AEO standards are internationally recognised, and are awarded by tax authorities (HMRC in the UK), once the tax authorities are confident about a business’ finance, compliance, safety and security procedures.
The aim is to provide business with an internationally recognised quality mark which will indicate that their role in the international supply chain is secure and their customs controls and procedures are efficient and compliant. An operator with AEO security and safety status implies that apart from being reliable in the traditional financial and customs terms, they are also compliant in respect of security and safety standards and can therefore be considered as a ‘secure’ trader and thus a reliable trading partner.
AEO status is not mandatory. However, holding AEO status can improve operations of businesses within the international supply chain especially after Brexit where businesses trading within the EU will also need to deal with customs regimes.
There are many benefits of obtaining this status. AEO status is not restricted to the EU – more than 70 countries recognise AEO or similar status.
AEO status is recognised internationally, and therefore your business will be acknowledged as a “preferred supplier”. As a result, you will have more business opportunities to expand your business within a network of suppliers of the same status.
The AEO status also provides many benefits such as:
- your business consignments will be subject to fewer physical and document checks at borders.
- If you are selected at controls, you will be given priority as an AEO consignment and even you can request to hold control at a different place.
- It will be quicker and easier for your business to obtain customs simplifications.
- Reduction in guarantees required.
AEO status can be requested by any business whether they are involved in manufacturing, exporting, importers, freight forwarding, warehouse keepers, courier companies. This is not an exhaustive list.
There are two types of AEO authorisations : security and safety (AEOS) and customs simplifications (AEOC). Depending on which certificate a business will need, they will need to demonstrate all or some of the following:
- an appropriate record of compliance with Customs requirements;
- a satisfactory system of managing commercial and, where appropriate, transport records, which allows appropriate Customs controls;
- appropriate financial solvency; and
- appropriate security and safety standards.
The whole process can take 4-6 months and it will also include a visit from HMRC to make sure that all the required conditions are met. Once a business has obtained this status, it can help in many ways.
Our expert team at Garbutt + Elliott will be more than happy to help you prepare an application, to make sure you have all the required information and meet all the conditions to avoid any unexpected queries from HMRC. Please feel free to contact Naveen Sahney at firstname.lastname@example.org or Alex Millar at email@example.com for any further help or assistance required.