VAT and Brexit

Should you consider Authorised Economic Operator (AEO) status?

In the lead up to BREXIT, there is a potential risk of supply chain delays caused by increased queues at the border – UK and overseas.

The introduction of customs controls on EU-UK trade after BREXIT will impose potentially substantial administrative burdens and risk of delays to traders. The UK government intends to implement a ‘highly streamlined customs arrangement’ to minimise the requirements as far as possible, based on new technological solutions and negotiating with the EU to continue close customs co-operation. But there will remain an irreducible minimum of new obligations with which traders will have to comply, on both sides of the channel.

To mitigate such risk, it may be worthwhile as a company to apply for certification as an Authorised Economic Operator (AEO).

AEO certification is an internationally recognised quality mark for companies whose customs procedures are efficient and compliant and can be considered as secure and reliable trading partners. Developed by the World Customs Organisation (WCO), it is established in the EU as a part of the Union Customs Code.

The UK government intends to continue AEO certification on a national basis after BREXIT and negotiate mutual recognition with the EU so that UK companies with AEO status would be given the same benefits in the EU as they will in the UK.

There are two types of accreditation and demand for AEO status has seen the timeframe for approvals increase. Recent reports in the press have suggested that it is now taking up to 12 months to gain AEO approval from HMRC.

Although the process involves a lot of work some experts have argued that the rigorous nature of the application process can be beneficial in its own right, helping companies understand their own supply chains and exposure.

The scheme may not be appropriate to every company, particularly where additional procedures (such as veterinary checks) need to be carried out at the border.

Guidance and more information can be obtained from HMRC notice 117 HERE.