Background
AEO status is an internationally recognised quality mark indicating that a business’s status in a cross-border supply chain is secure, and that its customs controls and procedures are efficient and compliant.
The authorisation is aimed at businesses that are established in the EU, actively involved in customs operations and international trade and have an Economic Operator Registration and Identification (EORI) number. When the UK leaves the EU, it looks increasingly likely that it will become a third country for customs purposes. Accordingly, the business operations of any EU-trading UK business will have to be reviewed to see if there is any benefit in those EU operations being brought under the AEO scheme.
Similarly, and in the absence of any bespoke scheme, the UK may seek to agree a Mutual Recognition Agreement (“MRA”) with the EU. This mirrors AEO arrangements in the EU, and there are a number of these MRAs currently in operation (e.g. with USA, Japan and Canada). When considering any benefits (see below), a business needs to look at its EU operations and how they are structured (so, for example, a company may set up an EU subsidiary to handle all its goods movements from the UK – an AEO in one Member State applies across the EU). If an MRA is agreed, the reverse may also apply for EU to UK imports.
Although there is no size threshold for approval as an AEO, the status, introduced some years ago, has never had the kind of take-up that other customs facilitation procedures (e.g. Inward Processing Relief or Customs Freight Simplification Procedures “CFSP”) have achieved; it is thought that fewer than 500 businesses in the UK have been granted AEO status. This is largely because those companies trading mostly with the rest of the EU have not needed to go through the application procedure and record-keeping requirements. With Brexit looming, and the need to retain the benefit of all possible simplification measures, this is liable to change for many businesses.
Details
There are two types of AEO available; Customs simplification (AEOC) and security and safety (AEOS).
Benefits
Having approved AEO status:
- gives quicker access to certain simplified customs procedures and authorisations and in some cases the right to ‘fast-track’ shipments through some customs and safety and security procedures
- allows for reductions (70%) or waivers of comprehensive guarantees
- allows movement of goods in temporary storage between different member states
- allows for a notification waiver when making an entry in a declarant’s records (EIDR)
- enables centralised clearance (when available)
- allows self-assessment of duty liabilities (where available); and
- can benefit AEOS holders with arrangements under mutual recognition agreements with third countries.
Eligibility
Any business involved in the international movement of goods can hold AEO status, including:
- < >< >freight forwarders
- warehouse keepers
- customs agents
- < >< >others (for example, port operators, secure freight parking operatives, airline loaders)
Requirements
To hold AEOC status, a business needs:
- good tax and customs compliance history (including that of individuals involved with the business)
- good commercial and transport record-keeping standards
- financial solvency
- staff holding relevant professional qualifications or an ability to demonstrate practical standards of competence in the relevant function
AEOS status can apply to any business that fulfils all of the above criteria with the exception of professional qualifications and practical standards of competence. In addition, the business must also have appropriate security and safety standards to protect its international supply chain, including:
- physical integrity and access controls for its goods
- acceptable logistical processes for the goods handled
- personnel and identification of business partners
AEOS status allows:
- a lower risk score – used to determine the frequency of customs physical and documentary checks
- consignments being fast-tracked through customs control
- reduced requirements for the mandatory pre-arrival/pre-departure
- the ability to benefit from reciprocal arrangements and MRAs with third countries, e.g. USA or trading partners that adopt the World Customs Organisation safe framework
This last bullet point, as pointed out earlier, may apply to UK trade, depending on final Brexit arrangements.
More detail can be found in UK Customs Notice 117. Clearly, this is currently written with the UK as a member of the EU. On leaving, though, it is most unlikely that this scheme will change substantially for EU operations. Similarly, it is highly likely that the UK will look to implement corresponding arrangements for trade with the EU and other trading partners.
If you want more detail on how to apply to become an AEO please contact us and we will be happy to assist.
