Authorised economic operator status

Monday 31 December 2007

The 2008 New Year sees the introduction of a new scheme to combat fraud and related crimes affecting the international business community. Under the scheme, businesses can be awarded the status of Authorised Economic Operator (AEO) with effect from 1 January. What are the benefits of obtaining AEO status and, if you have not already done so, how can you apply for AEO status?

What is AEO status?

AEO status is at the centre of The Customs Security Programme (CSP). CSP is an EU wide initiative which is intended to tackle terrorism, fraud and counterfeiting. It aims to introduce enhanced security controls to ensure that the EU internal market is protected and, in co-operation with major world trading partners, also aims to secure the international supply chain. Similar initiatives are already in place in the US, Canada, Australia and New Zealand. In addition, CSP will provide facilitation and benefits for reliable businesses who demonstrate their compliant efforts to secure their part of the supply chain.

All businesses that own or move goods through the international supply chain are affected, irrespective of the size or trade sector.

AEO status is conferred upon a business that has met certain criteria and is confirmed by the receipt of an AEO certificate.

What types of AEO certificate can be applied for?

There are three different AEO certificates that can be applied for:

• Customs Simplifications - benefit from simplifications for Customs rules
• Security and Safety - benefit from facilitations of Customs controls relating to security and safety when goods enter or leave a territory
• Customs Simplification/Security and Safety - benefit from both of the above

What are the benefits of obtaining AEO status?

Depending on the type of certificate, the potential benefits include:

• an AEO's goods will move with limited interruption across EU borders and are expected to be subject to fewer physical and documentary examinations;
• goods belonging to an AEO will be subject to priority examination and clearance if they are selected;
• an AEO will be able to access simplifications such as Guarantee Waivers;
• AEO status is seen as a kite mark by the European Commission and Customs authorities as a 'trusted and compliant member of the supply chain'.

In addition to the above, participants in comparable schemes in other countries have enjoyed indirect benefits such as reduced theft and pilferage, an increased security awareness within the business, reduction in insurance premiums and enhanced customer relationships.

How can you apply for AEO status?

AEO application packs are available on the HM Revenue & Customs website and businesses can apply using a secure, online web application form. This is an interactive form that has links to guidance notes to help businesses complete the relevant questions.

How long will it take for the certificate to be issued?

Before AEO status can be granted, other EU member states must be informed and consulted where the Customs activities of the applicant extend to their country as well as the UK. Depending upon the activities of the applicant, the time limits for receiving a certificate range from 70 to 120 calendar days.

Karen Robb, a VAT partner at Grant Thornton says: "Businesses that are considering whether to apply for accreditation may also need to take other commercial factors into account. For example, non-AEOs may be placed at a competitive disadvantage with regard to their peer group if AEO certified businesses prefer to trade with other AEOs. In addition, following the implementation of pre arrival/departure summary declarations in July 2009, non-AEO businesses will be required to submit more data than AEOs.

"Due to the potential time delay in issuing certificates, businesses that have not yet applied for AEO status should do so without further delay".

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