As UK-EU importers and exporters prepare for Brexit changes on 1 January 2021, we consider some of the potential protections available to international traders. One useful quality mark that we advise anyone using European freight forwarding services to look for is AEO status.
But what does it mean, why is it desirable and how might it cushion you from disruption arising from Brexit changes? As a Midlands freight forwarder specialising in European groupage, here is our quick guide to AEO accreditation – and why using an AEO-certified company might be useful to your shipping process and freight operations.
What does AEO stand for?
AEO stand for Authorised Economic Operator.
What does AEO status mean?
Authorised Economic Operator status is awarded by HM Revenue & Customs to companies that have demonstrated professional and consistent compliance with the rules relating to export and import customs. It is an internationally recognised mark of quality, not just in the EU but internationally. Essentially it shows that an operator’s role within the international supply chain is secure, and that its customs controls and procedures are efficient and compliant.
If you’re looking for a ‘secure’, reliable trading partner, this is the 'trusted trader' accreditation to check for.
What are the benefits of AEO status?
Does AEO status help with customs? It certainly does offer value to importers and exporters. AEO-accredited freight and transport operators are afforded a ‘light touch’ by HMRC when document queries arise during an export or import transit. Instead of customs holding up a shipment they will allow it to proceed on the basis that the query will be resolved within a given period of time.
Authorised Economic Operators are also given preferential terms by HMRC regarding the security needed for export and import guarantees relating to the payment of duties, taxes and VAT.
There may also be indirect commercial benefits such as reduced incidences of theft or losses in transit, improved security and communication with partners in the supply chain, and improved customer confidence.
How do you become an AEO?
Anyone involved in the international supply chain that carries out customs-related activities in the UK and EU can apply for AEO status, including manufacturers, exporters, freight forwarders, warehouse keepers, customs agents, carriers and importers.
The application forms and explanatory notes can be downloaded from the HMRC AEO website. The process is time-consuming and complex. Ideally a senior manager should be given the task as a project and released from their normal day-to-day duties. Once accredited, a company will then be subject to an audit process every two years by HMRC.
What are EORI numbers?
Companies applying for AEO status also need an EORI number. EORI stands for Economic Operators Registration and Identification number. Every UK company involved in exporting and importing must have one and it is one of the data sets shown on a customs entry.
Post-Brexit, the EU currently has rules that any UK company exporting to the 27 member states must also have an EU as well as a UK EORI number. As the EU normally only issues an EORI number to a company with a physical presence in an EU state or who has an EU fiscal representative, it remains to be seen if any trade deal between the UK and the EU will include an exemption from this requirement.
AEO after Brexit – what will happen?
The EU has announced that from 1 January 2021 it will no longer recognise AEO accreditations issued by UK customs. HMRC has, therefore, adopted its own UK AEO accreditation identical in nearly every respect to EU standards. Existing UK AEO holders have been issued with new certificates and future successful applicants will receive the UK certificate. It is expected that the EU and UK will recognise each other’s AEO schemes after Brexit.
Post-Brexit, UK AEO accreditation will enable the company to obtain early approval to comply with the new UK customs regimes being introduced to control the transit of goods to and from the 27 EU countries. This includes the greater guarantee levels of AEO status, which will help the movement of goods without customs border checks thereby speeding up customers’ supply chains.
We expect AEO certification to become even more desirable after Brexit as an internationally recognised standard that will help keep cargo moving.
How do I find AEO-certified companies? How do I check an AEO certificate?
UK Authorised Economic Operator queries can be carried out on the European Commission’s AEO database until the end of the transition period. After that, UK companies with AEO status are set to be recorded on an HMRC central AEO database which will be accessible by the customs authorities in other member states.
For our own company, IFL received its AEO accreditation in October 2010 after a two-year preparation and vetting process. It has enabled us to provide expert advice to customers on export and import procedures. And it has helped to expand our export and import guarantee facilities to enable it to handle greater volumes of business needing security for customs, duties, taxes and VAT. We operate 24-7 customs clearance services through our Dover office.
Getting ready for Brexit
To help our customers with their forward planning, we recently compiled a Brexit update in Import and export changes from 1 Jan 2021. The situation is changing quickly however so for the latest information on how we can help with your import/exports to the EU, please get in touch.