A spotlight on AEO – your questions answered
25 February 2019
This is the latest article in our Brexit series focusing on the subject of AEO Accreditations, which many of our clients have asked us about recently. As the Brexit negotiations continue to rumble on, it’s something that is growing in importance, but do you know what it is and why it’s important for your business post Brexit? Take a look below for everything you need to know.
What is an AEO status?
An Authorised Economic Operator (AEO) status demonstrates a company as being secure and “indicating that its customs controls and procedures are efficient and compliant”. It’s an internationally recognised quality mark and for UK businesses with an AEO status, it highlights an organisation’s competence in customs procedures when Brexit comes around – whatever form it may take – and keep up with European counterparts who are more likely to have already have AEO status.
What’s the benefit of getting an AEO status?
It’s vital that exporters obtain this status to ensure that all customs procedures are up to scratch. For those that have it, there is a real opportunity here, because it puts them in strong position no matter what the customs arrangements with the EU will be, post-Brexit. By attaining the status, UK businesses can also protect themselves against some of the more negative ramifications of Brexit – such as delays in clearing ports.
What is the demand for AEO?
In January this year, the Institute of Export and International Trade reported that there had been a surge in UK AEO applications – a sign that businesses are beginning to prepare for Brexit; despite a slow start, highlighted by our Brexit white paper at the end of last year. With a 26% rise in registrations in January 2019, compared to February 2017, we can safely say that there is a higher percentage increase in registrations for AEO across Europe.
Should my logistics provider have an AEO status?
Although not mandatory, logistics providers will benefit from an AEO status; not only to safeguard position in the supply chain market post-Brexit, but also to ensure their services are up to scratch and operating as efficiently as possible.
Brexit will increase the need for greater customs competency, instilling confidence in clients and ultimately, reducing risk for clients. Plus, in some cases, the status will give providers the right to ‘fast-track’ shipments through customs. As such, it’s a you should ask your provider, sooner rather than later.
Is the AEO Accreditation likely to change, post-Brexit?
The benefits of AEO have somewhat been confused by recent information in Directorate General for Tax and Customs paper on the Withdrawal of the United Kingdom and EU rules in the field of Customs and Indirect Taxation.
The paper states:
‘Authorisations granting the status of Authorised Economic Operator (AEO) and other authorisations for customs simplifications, issued by the customs authorities of the United Kingdom will no longer be valid in the customs territory of the Union.’
This appears to show that the view in Brussels is that AEO status granted by the UK will not be recognised post-Brexit.
While this could mean that UK companies could lose all their benefits associated with the status, analysis following the EU publication has been unable to ascertain how this will be reflected within a Brexit deal, and is contradictory to earlier discussions with HMRC. Previously, HMRC has confirmed that all AEO programmes would continue in the UK format as part of the porting-over of EU law – including the Union Customs Code (UCC) - into British statute as part of the Great Repeal Bill process.
As we closely follow the ongoing political negotiations, we will keep you updated and confirm once all details are fully known as without AEO status, the requirement for payment of guarantees can introduce significant costs to businesses.
If you have further questions relating to the effect of Brexit on your supply chain, please get in touch to our experts and contact them by phone on +44(0)1795 508142 or by emailing mailing: Brexitsupport@carousel.eu