Types of Authorised Economic Operator status and how to apply
Nick Crouch · Posted on: February 5th 2024 · read
Authorised Economic Operator (AEO) is an internationally recognised standard which shows a businesses role in the supply chain is secure and has customs controls in place that are compliant and efficient. AEO is a ‘trusted trader’ status.
In the UK, AEO has been around since 2008 and many businesses have obtained the certification from H.M. Revenue & Customs (HMRC). AEO is now the standard expected by HMRC when reviewing customs compliance for a UK importer or exporter.
As HMRC has moved towards the expectation of documented procedures, businesses involved in the international movement of goods should consider the benefits of AEO as outlined below.
Depending on the type of AEO status you hold, you could benefit from lower risk scores, priority treatment for customs controls, faster processing of customs simplification applications, reduced administration and many more.
Authorised Economic Operator Status
There are 2 types of status:
Authorised Economic Operator Customs Simplification (AEOC):
This status is issued to businesses that fulfil the criteria of customs compliance, appropriate record keeping standards and financial solvency.
Since Brexit, the benefits of AEOC have been considerably reduced due to HMRC allowing many importers to obtain Customs Authorisations without the need for significant bank guarantees. Also, the waiver scheme for Duty Deferment holders reduced the AEO benefits as this was one of the main selling points as it reduced the guarantee required to hold a deferment account.
AEOC still has its benefits, but these are more to do with maintaining customs compliance, a key consideration if your business imports goods on a regular basis. As AEOC covers documentary controls and internal auditing, AEOC can be a very important part of a company’s internal auditing process.
Authorised Economic Operator Security and Safety (AEOS):
AEOS focuses on supply chain security measures and the control and access of the goods. It requires the business to have robust processes in place to ensure the safe storage, handling and distribution of the goods whilst under the company’s control. This includes documented procedures for many areas of the company, such as purchasing, sales, logistics, HR and security.
A key part of AEOS is the storage facility and HMRC will check its integrity to ensure that it is secure and covered by sufficient controls.
One of the main benefits of AEOS is it is mutually recognised by many other AEO countries, such as the EU and USA. In fact, AEOS may be beneficial purely for businesses who export to the USA as this will reduce the likelihood of import checks and delays at the US port. Many industries use AEO as a ‘kite mark’ as it confirms the standard of security controls in the supply chain.
With AEO, you can decide which certification will be most beneficial. It could be that AEOS, with its security controls, provides a means to generate new business. You can therefore apply for customs simplification or security and safety, or you can apply for both.
The application process for AEO involves a ‘deep dive’ into the company’s processes focusing on customs and shipping procedures, finances, HR and safety and security. It is a key requirement to have satisfactory processes in place to enable HMRC to test and scrutinise the controls to ensure the business meets the minimum standards required under AEO. This is where investment, both in developing/recording processes or ensuring security measures are sufficient, is required otherwise AEO status will not be granted by HMRC.
Contact us
Our customs experts have many years of experience within HMRC, processing AEO applications and with external business preparing applications. We can advise whether this regime offers a tangible benefit to your business and will support you through the application and ensure that processes and policies are in place to secure and maintain this status.
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