'Significant' customs procedure changes unveiled for start of 2021

Wed 15 Apr 2020
Posted by: Ana Pintor
Trade News

The government last week announced changes to trade procedures for UK businesses starting from 1 January 2021 that experts describe as “significant”.

Following the end of the Brexit transition period – assuming it is not extended as result of COVID-19 disruption – the UK will no longer be required to operate under EU rules, impacting how the UK trades with the EU and the rest of the world.

The announcements made on the gov.uk site on 9 April include:

  • Removal of the requirement for bank guarantees for customs special procedures applications
  • Changes to how UK parent companies can operate and trade on behalf of UK subsidiary companies
  • A new UK AEO (authorised economic operator) status

Spotlight on AEO status

Of all the changes announced, the advent of a new UK AEO status is particularly noteworthy.

AEO status is an internationally recognised quality mark that shows an exporter or importer’s secure role in the international supply chain. It also indicates that a business observes customs controls and procedures to UK and EU standards.

Having AEO status gives quicker access to simplified customs procedures and, in some cases, the right to fast-track shipments.

Currently, AEO status granted by an EU customs authority covers operations in the UK.

The key change is that UK businesses who are benefiting from AEO status for their branches and permanent establishments in the EU (covering, for example, warehouses, packing establishments and sales offices).

Currently AEO status in the UK can cover branches and permanent establishments in the EU but will this no longer be the case after the 1st January 2021.

To enjoy these benefits, the UK company would need to apply to the customs authorities of an EU member state.

The same applies for EU companies operating in the same way in the UK.

Application time reduced

Application times for customs special procedures will be significantly reduced now that bank guarantees aren’t required.

Director of stakeholder engagement for the IOE&IT, Kevin Shakespeare, told the Daily Update (15 April) the government’s announcement were “significant for their impact on the way you trade”.

He added the IOE&IT is “committed to keeping members updated” on all trade developments.

“Assuming the transition period is not extended beyond January 2021, the way businesses trade in 2021 will change. These announcements re-enforce the importance of the IOE&IT in interpreting the changes and encouraging businesses to professionalise and maximise use of customs special procedures,” Shakespeare said.