What are the benefits of AEO for UK businesses?
As a UK business, it’s possible to become an Authorised Economic Operator (AEO). This is an internationally recognised accreditation, granted to businesses who satisfy criteria related to customs compliance and other related processes. But, what are the benefits of AEO?
In this article, you’ll learn about AEO and it’s upcoming relevancy to your supply chain.
What is AEO?
The Authorised Economic Operator scheme was introduced to enable legitimate businesses to demonstrate their compliance with customs processes and regulations. The trust mark is designed to recognise those who are trusted traders, then allowing them to showcase this to partners and authorities.
Once certified, a business can more easily negotiate permits and licenses with customs in countries which recognise the status. The scheme extends to other supply chain businesses, such as customs agents, manufacturers, importers, and port operators.
Businesses with AEO enjoy benefits throughout the EU and several other countries where there are Mutual Recognition Agreements. These are China, Japan, the USA, and Switzerland.
There are two types of AEO licence, each with its benefits and criteria:
- Authorised Economic Operator Customs Simplification (AEOC): Suitable for businesses which facilitate the supply chain, such as customs brokers and freight forwarders. This involves satisfying HMRC of your compliance in customs, financial, and administrative processes.
- Authorised Economic Operator Safety and Security (AEOS): Suitable for businesses which physically store and transport goods. You need to demonstrate that your processes related to security and safety are sufficient to obtain AEOS.
It is possible to hold both licences, sometimes referred to as being a fully Authorised Ecconimic Operator (AEOF).
Being an Authorised Economic Operator is designed to make customs and border procedures easier when trading with the EU and with other countries which recognise your AEO status. As the number of border movements is increasing wordwide, customs authorities are beginning to look at “trusted trader” models, such as the UK’s Ecosystem of Trust, so the benefits of AEO will become more prominent as time goes on.
If you hold an EAOC, you will likely benefit from:
- Fewer checks of goods and your documentation. As a trusted business, you will have a ‘lower risk’ score and will likely experience less disruption.
- A guarantee waiver up to the level of your deferment account.
- A quicker process when applying for customs simplifications and authorisations.
If you hold an AEOS, you will likely benefit from:
- Fewer checks of goods and your documentation – As a trusted business, you have a ‘lower risk’ score and will likely experience less disruption.
- priority status for your shipments when passing through any border of a country which recognises your licence.
- Fewer declaration requirements for summary declarations on entrance or exit.
Beware that the benefits of AEO will vary depending on the countries involved. For instance, businesses based in the EU and Northern Ireland are also set to receive prior notification of inspections and a choice of location for those inspections, but this is not currently expected for the UK.
AEO status does not exempt you from other procedures designed to expedite the shipping process, such as the use of a T1 Form when transporting goods through multiple EU countries. Nor does it completely protect your supply chain from inspections and audits.
The benefits of AEO as a trust mark
As well as the expedited customs experience, being AEO certified also bolsters the perception of your business in international supply chains. Being AEO certified will ensure you are viewed as a preferred supplier in the 70 countries with an AEO scheme, or similar accreditation system. With prospective trading partners having greater confidence in your business, you obtain access to desirable supply chains which require AEO as a barrier to entry.
As more and more countries and businesses begin to require a form of quality assurance like the AEO, becoming certified now could help to future-proof your business.
For help with customs clearance or more information on AEO and other related topics, please contact us.