Martin Dubbey, director of SafeguardAEO and a former senior official with HMRC, explains why his company developed a software system to help with the complexity of applying for Authorised Economic Operator (AEO) status and the benefits of doing so.
This article is the view of the author and not necessarily of Ready for Brexit
AEO status is an internationally recognised quality mark that shows your role in the international supply chain is secure and that customs’ controls and procedures are efficient and meet EU standards.
HMRC says that AEO status “gives quicker access to some simplified customs’ procedures and, in some cases, the right to ‘fast-track’ your shipments through some customs’ and safety and security procedures.”
In effect, HMRC is saying that the fastest, safest and most cost-efficient way to move goods across international borders now involves using an operator with AEO status. This means that any operator that does not hold this ‘internationally recognised quality mark’ could find itself at a serious competitive disadvantage. Consider this:
If you had to choose between one provider with AEO status and one without it, which would you choose?
Deciding you need AEO status is easy. Applying for it is more complex.
The AEO application has over 240 questions. If you fail to answer any of these to HMRC’s precise requirements, your application may be rejected. This is why we developed our software. It helps you to complete the entire application process easily, quickly and successfully. It guides you through the process of application, culminating in a gap analysis of your scores that enables you to correct deficiencies, like a pre-MOT health check. Once satisfied that your score will likely result in a pass, then you press a button and your application automatically populates the official application.
Why achieve AEO status?
As the UK looks to move beyond Brexit, there can be little doubt that increased supply chain security and greater customs simplification is the way that cross-border logistics is heading. That seems clear from the statements coming from the UK Government, the EU, HMRC and the Prime Minister herself.
Attaining AEO, or ‘Trusted Trader’ status is critical to achieving ‘frictionless trade’ throughout the global supply chain for all businesses operating within European and international export markets.
Looking forward, any economic operator involved in the movement of goods across international boundaries that fails to secure AEO accreditation is likely to find itself at a distinct, and potentially damaging, competitive disadvantage. This is because customers are unlikely to tolerate the logistical delays, increased costs and commercial risks associated with using providers that do not hold the ‘internationally recognised quality mark’.
What are the benefits of attaining AEO status?
The benefits of attaining AEO accreditation are many and meaningful.
In short, once you attain AEO accreditation, HMRC will treat your business operations with a ‘light touch.’ In practical terms, this means your vehicles and goods will be fast-tracked through Customs’ control. You will receive fewer physical and document-based controls and you will not be required to provide nearly as many mandatory declarations.
You will also receive prior notification of any inspections relating to safety, security and customs’ legislation. In addition, if your operation should be selected for customs’ checks or interventions, you will qualify for priority treatment and you will have the ability to clear goods in your own depot.
AEO will also enable you to obtain a customs’ guarantee for duty deferment, so you will not be required to deposit a substantial amount of cash with your bank, thereby improving your cash flow and, as you will not have to pay duty, the moment that the goods cross the border your cash-flow will be improved further still.
Is HMRC taking AEO seriously?
Months ago it could have been argued that the answer is no. That has all changed. HMRC has committed 1,500 staff to policing the future of AEO and is committed to an ambitious training process for its staff. There are clear indications of staff being moved from their regular duties to make up the numbers on AEO duties. In just the past month, HMRC has announced that AEO applicants can expect their waiting time to be cut from 120 to 60 days for approval. As earlier stated, all simplification process applications now start with the question “Are you AEO qualified?” Just having the qualification will give you a head start on some of the other more arduous applications.
When should my business apply for AEO status?
Whatever future customs’ arrangements the UK has with Europe and the rest of the world, the safest and most cost-efficient way to move goods across international borders will involve using an operator with AEO status. Both the UK Government and HMRC have made it clear that improved supply chain security and greater customs’ simplification is the route to frictionless trade.
AEO status is now the de facto standard by which all economic operators are evaluated and selected. The sooner you attain AEO status, the sooner you will enjoy the logistical and commercial benefits it brings, and the sooner you will gain a competitive advantage over those operators that have been slow off the mark.