What is an AEO?

The concept is based on the Customs-to-Business partnership introduced by the World Customs Organisation. Businesses who voluntarily meet a range of criteria in cooperation with customs authorities to ensure supply chain security and expertise will enjoy benefits throughout the EU. AEO is an internationally recognised quality mark indicating that a business within an international supply chain is secure and that its customs controls and procedures are efficient and compliant.

AEO is not mandatory but provides quicker access to certain simplified customs procedures and in some cases, the right to fast-track shipments through customs and safety and security procedures.

Although the impact of Brexit remains unclear, it seems likely that some form of certification in customs competency will be of benefit post-Brexit.

Who can become an AEO?

Any business based in the customs territory of the EU, who is part of an international supply chain, involved in customs related operations and has an Economic Operator Registration and Identification (EORI) number can apply for AEO.

AEO has various levels of authorisation covering customs simplifications (AEOC), security and safety (AEOS) and a combination of both (AEOF – full AEO). Typical businesses that might benefit include:

  • Manufacturers
  • Importers/Exporters
  • Freight forwarders/Customs agents
  • Warehouse keepers
  • Carriers

What are the conditions and criteria?

In order to become an AEO, certain conditions must be met, not limited to, but including for example:

  • Good tax and customs compliance history
  • Good commercial and transport record-keeping standards
  • Professional qualifications or demonstrating practical standards of competence in the activity they are involved in
  • Appropriate security and safety measures

What are the benefits?

The benefits that come with AEO are dependent on the type of authorisation held. In general, examples of what an AEO could benefit from include:

  • Faster application process for customs simplifications and authorisations
  • Reductions or waivers of comprehensive guarantees
  • 70% reduction in deferment account guarantee
  • Centralised clearance
  • Fewer physical and document based controls related to customs legislation and safety and security
  • Recognition as a secure and safe business partner
  • Improved relations with customs and other government authorities
  • Fewer delayed shipments
  • Improved customer service and loyalty

AEO status granted by one Member State is recognised by the customs authorities in all Member States. As part of the benefit of mutual recognition, customs authorities agree to provide reciprocal benefits to AEOs of another programme.

How to apply?

HMRC have issued an application pack containing form C117 which requires basic business information together with form C118 which is a detailed questionnaire about the business activities. The application can also be completed online. All other process and procedure documents in support of the application must be retained and made available for the audit stage.

HMRC audit

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Following application, HMRC will visit in order to verify the supplementary documentation provided. If the relevant criteria are met, the authorisation will be issued within 120 calendar days although this can be extended by either HMRC or the business to deal with any areas where the criteria is not met.

HMRC will check the record of compliance for the last three years, with a focus on business management and people responsible for customs matters and look to see that there are various procedures in place for handling:

  • Identification of errors and making disclosures
  • Action taken on errors
  • Controlled goods
  • Notification of changes to customs matters

HMRC must be satisfied that there is a good system for managing commercial and, if relevant, transport records, including:

  • Documented procedures
  • Internal controls
  • Trained staff
  • IT security
  • Maintained accounting system with good audit trail

Once approved

An approved AEO must continue to meet the criteria and notify HMRC of material changes to the organisation, personnel, systems or procedures. If this is not done, suspension or revocation of the approval is possible. Holders of AEO are entitled to use the logo.

How Menzies can help?

Sean Turner

The application process is very detailed and depending on the complexity of your business, can be time consuming to complete taking resource away from the day to day business. We would be happy to assist with the application process by reviewing existing documents, policies and procedures and advising on necessary updates and changes in order to meet the requirements of the application and HMRC audit. We can guide you through the whole application from start to finish, review the finalised version prior to submission, with a view to minimising questions from HMRC, and be available during the audit, if necessary.

Please contact us should you require further information on AEO or assistance with applying Should you wish to discuss this further then please contact Sean Turner on sturner@menzies.co.uk or 0207 465 1908.

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