AEO status: could your business benefit?
Authorised Economic Operator status
The European Union (EU) Authorised Economic Operator (AEO) scheme is a voluntary, globally recognised supply chain accreditation. It was introduced in the EU to create a system of ‘legitimate’ businesses identifiable within the international supply chain as being safe and secure. It is available to any EU-established business involved in imports and/or exports.
The AEO concept is based on the Customs-to-Business partnership introduced by the World Customs Organisation (WCO). Businesses who voluntarily meet a wide range of criteria work in close cooperation with customs authorities to assure the common objective of supply chain security and are entitled to enjoy tangible benefits throughout the EU.
Applying for certification
There are two types of certification but businesses can also apply for both types:
- AEOC (Customs Simplifications) status: is issued to a business that fulfils the criteria of customs compliance, appropriate record keeping standards, financial solvency and practical standards of competence or professional qualifications directly related to the activity carried out.
- AEOS (Security and Safety) status: is issued to a business that fulfils the criteria of customs compliance, appropriate record keeping standards, financial solvency and maintains appropriate security and safety standards.
An application for AEO certification in the UK is made to HM Revenue & Customs. From the point of written acceptance of an application, HMRC has 120 days to make a decision regarding whether AEO certification will be awarded to the UK applicant.
The benefits of AEO status
The AEO benefits are dependent on the type of authorisation held (some may only apply to AEOC or AEOS status) and include the following:
- An industry ‘kite mark’ standard and useful marketing tool
- A recognised status across the EU that should make it easier for businesses to apply and use simplifications across the Union
- Up to a 70% reduction in a deferment account guarantee
- Reduction or waiver of a comprehensive guarantee
- Fewer physical and document-based controls related to other customs legislation
- Swifter application processes when applying for customs simplified procedures such as Customs Freight Simplified Procedures, Inward Processing and Customs Warehousing etc.
- A lower risk score which will be incorporated into customs’ risk management systems and be used to determine the frequency of customs physical and documentary checks
- Consignments selected for examination will receive priority over non-AEO consignments through customs controls
- Mutual recognition with countries outside the EU and trading partners that have adopted the WCO Safe framework (such as USA, China, Japan, Norway and Andorra)
The AEO scheme may be beneficial for businesses that have a substantial level of B2B sales of goods to customers in Europe. At the moment we don’t know what the UK’s participation in the Customs/VAT Union may look like post-Brexit. Therefore businesses may see disruption and delays in their international supply chain, particularly in terms of despatches to other EU countries.
AEO certification should be considered by businesses seeking to preserve the speed of their supply chain as a potential proactive tool, to enhance their business continuity and contingency planning as the Brexit negotiations evolve.
For advice on how AEO status could benefit your business or how to achieve certification, please get in touch on 01903 234094.