Does my company need AEO status and how do we get it? We answer your questions

Fri 14 Apr 2023
Posted by: William Barns-Graham
Features

Logistics worker with clipboard inspecting a package of goods in a warehouse

Since Brexit, businesses have faced new customs rules to move goods between Britain and the EU, including completing declarations.

For businesses moving several consignments over a given period, these new requirements can prove burdensome, but both the UK and EU provide authorisations to help businesses manage this.

This includes the Authorised Economic Operator (AEO) scheme – an internationally-recognised mark of quality that, in effect, gives firms a ‘trusted trader’ status.

Q1: What is AEO?

AEO certifies that that a business’ role within the international supply chain is secure and that its customs controls and procedures are efficient and compliant.

It is recognised around the world with internationally operating businesses in the US and China in particular viewing it as increasingly important.

There are two types of AEO currently available, which have their own criteria and benefits:

  • AEO-C Customs Simplifications focuses on establishing internal quality management controls for customs compliance
  • AEO-S Safety & Security focuses on supply chain security measures

Q2: What are the benefits?

Though achieving AEO status can be a time-consuming and often daunting exercise (a process with which the IOE&IT can help – see Q9 below), the commercial benefits can be immense and include:

  • Greater access to priority clearance
  • Reduced administration
  • Reductions or waivers of customs deferment and comprehensive guarantees
  • Increased transport security
  • Fewer delays in despatch
  • Improved security between supply chain partners
  • Quicker access to other customs authorisations  

AEO-S certification testifies to the security of your international supply chain and companies holding this certification have a clear advantage when exporting to the world’s largest economies with which the UK has struck ‘Mutual Recognition Agreements’, especially the US.

Priority clearance for AEO-S certificated businesses will, by default, mean that non-certificated organisations will be dealt with as a secondary concern. When time is of the essence, such delays in delivery could prove ever more costly.

Q3: What sort of firms can gain AEO status?

Registration is open to all businesses in the UK that are involved in the international trade of goods with EU or non-EU countries, including logistics operators, carriers, freight forwarders, customs agents, importers, exporters and manufacturers.

To qualify a business must:

  • Be a legal entity established in the UK
  • Be actively involved in customs operations and international trade
  • Have an Economic Operator Registration and Identification (EORI) number
  • Have a good history of compliance with government authorities

Q4: How many UK firms are AEO-accredited?

The UK has 1,234 approved AEO registrations, as of March 2023. This includes 609 companies with both AEO-S and AEO-C status, 20 with just AEO-S status and 605 with just AEO-C.

Q5: How long does the AEO application process take and what does it cost?

While there is no fee for applying to HMRC for AEO accreditation, the application process takes time and can be overwhelming.

Application preparation and submission typically take between three to 12 months, followed by 120 days for customs to assess your submission, including site visits.

The IOE&IT provides a consultancy service to support firms through to application process.

Once achieved, AEO status is indefinite but your firm will be reassessed every three years, through an on-site visit from HMRC.

Q6: What are the criteria for achieving AEO status?

As part of the application process, HMRC officials will assess your firm’s:

  • Finances
  • Shipping procedures
  • Compliance with customs requirements
  • Quality management – including documented procedures and the customs knowledge within the firm

If a company applies for AEO-S, the assessment will include site security, HR vetting and supply chain security measures.

Companies that have achieved an established quality management system – such as ISO9001 accreditation – are already well on the way to attaining AEO status, a status that verifies a company’s secure systems around the movement of goods across borders.

Q7: What causes an AEO application to be rejected?

We understand the main reasons for application rejection by HMRC include:

  • Insufficient responses on the initial application forms
  • A lack of evidence during the assessment stage
  • A general lack of understanding of the criteria that expects a comprehensive understanding of UK customs legislation and customs entry auditing

Fortunately, the IOE&IT has a proven track record of project managing AEO applications through to successful outcomes.

Q8: Where can my firm get help with the AEO application?

Depending on your level of interest, the IOE&IT provides training courses and consultancy packages that will help.

(i) Initial discussion

If you have not yet considered becoming an AEO, we offer an initial discussion to help decide if it will benefit your organisation. Please call us on 01733 404400 or email us at clientservices@export.org.uk putting ‘AEO status’ in the subject line.

(ii) Training course

If you’re keen to learn more about AEO requirements and benefits, the IOE&IT offers a one-day course as an introduction to all aspects of the process.

You will be guided through the application process to enable your organisation to achieve and crucially, maintain AEO status.

The course will also highlight the pitfalls that companies typically experience and explain how to avoid delays and mistakes. Find out more here.

(iii) AEO consultancy

Once you’ve decided to apply for AEO status, the Institute can help take you through every step towards acquiring and maintaining AEO status.

We offer three tiers of service ranging from an initial 'readiness review', through to application completion.

Following the initial review, we will be able to advise on the cost of helping you to prepare and submit your application if you decide to progress. Find out more here.