The introduction of the Authorised Economic Operator (AEO) status came about as a means to provide a certified standard for parties across all stages of the supply chain.
Internationally recognised, with more than 70 countries operating AEO or a similar initiative, holding an AEO accreditation indicates that a company’s role in the supply chain is secure and reliable, and that any Customs controls and procedures are efficient and compliant.
There are extensive benefits for an organisation in becoming certified, and there has been a growing recognition of these benefits since the Union Customs Code (UCC) regulations were implemented. Although certification is optional, it can increase business opportunities, as well as save companies time and money.
AEO is applicable to anyone involved in the manufacture or distribution of goods globally, including warehouse operators, manufacturers, distributors, transport companies, port operators, freight forwarders and Customs agents.
There are two different types of certification; AEO(S) covers safety and security and is applicable mainly to exporters, whilst AEO(C), offers a vast range of benefits, many of which focus on the import of goods, and the use of special procedures, as well as including AEO(S).
Some of the key benefits to AEO include faster clearance operations, with fewer physical and documentation checks by border force; not only on imports to the UK, but also on exports to countries such as the US, Japan and China, which have a mutual recognition agreement with EU countries. Companies trading with businesses in China who operate under AEO status have experienced instances where goods have received immediate clearance as opposed to the standard 3-6 days wait.
The completion of paperwork is simplified too, with reduced requirements on some Customs declarations.
For businesses that are AEO certified that wish to utilise Customs simplified procedures, the application process is quicker, whist holding the AEO accreditation means that it is easier to qualify.Even more significant though, are the savings that can be made! Following amendments to the regulations governing the import and export of goods, under the UCC hefty financial commitments are required for companies without AEO, to cover the now mandatory guarantees to operate simplified customs procedures. For companies that are AEO(C) certified the reductions of financial guarantee levels under AEO when taking advantage of procedures such as inward processing relief, customs warehousing and community transit are up to 70% for actual Customs debts and up to 100% for potential Customs debts.
Indirectly, AEO certification can offer a host of other benefits. There is recognition of being a competent trading partner, as AEO is deemed as a quality mark, whilst the self-assessment process involved helps to ensure that the supply chain is secure, safe and economically efficient. AEO certification also offers the provision of a comprehensive relationship with Customs.
Having discovered the benefits that AEO can offer your business, you’re probably now wondering….
It’s no lie that applying for AEO accreditation can be quite a lengthy process. However, given the significant benefits offered, and the decreased level of Customs inspections for goods being transported by AEO accredited companies, it’s evidently going to be an in-depth process to ensure supply chain security. The extensive assessment process includes self-assessment and visits to premises by HRMC to carry out onsite audits.
The criteria for application for AEO(C) includes the need to provide evidence of a history of tax and Customs compliancy of three years (or the information available if established for less than three years), a satisfactory system of managing commercial, and where applicable, transport records allowing for appropriate Customs controls, evidence of financial solvency and evidence of competence.
If applying for AEO(S) or AEO(C) you will be required to provide evidence of appropriate security and safety standards being in place and documented.
With the time and effort required for an AEO application, you may be wondering whether it is actually worth applying, as, like many, you may be asking that, given the current political situation….
There is currently a lot of uncertainty as to the rules and regulations which will be in place with regards to trade come Post Brexit. However, it is expected that AEO, in one form or another, will still be relevant as it is anticipated that the protocol of the Union Customs Code will still be applicable.
Indeed, indications are that, should the UK fail to reach a Customs agreement with the EU come Brexit that AEO certification will become an absolute must for UK businesses wishing to trade internationally.
With AEO likely to still be relevant Post Brexit, and as AEO becomes more widely spread, more companies are insisting their suppliers are AEO accredited. As such the number of applications is expected to vastly increase so the earlier you can apply for AEO the better.
Ahead of applying for AEO you will need to ensure that you have an EORI number. If this is already in place and you’re ready to begin the completion of your application, here are the forms to get you started:
Form C117 – Application form, requesting basic information about the business
Form C118 – Self-assessment questionnaire about your business activities
If upon assessment your company meets all of the relevant criteria, you will receive your authorisation.
As we’ve mentioned, applying for AEO status can be a lengthy process. If you’re not yet ready, or don’t have the time to make your application for your own AEO accreditation, there is another solution. It is possible to take advantage of Velta’s AEO status.
Through our dedicated customs department we provide specialist knowledge and software, enabling you access to the benefits of AEO. So not only can you entrust the transportation of your goods with us but you can also rest assure your business partners have the security of AEO trust in your supply chain.