Authorised Economic Operator Scheme

Authorised Economic Operator Scheme

There has always been economic pressure on certain sectors of the British and World economies to proactively respond to change, whether that be refinements to manufacturing processes, streamlining logistics operations or wholesale diversification. Brexit is one more economic imperative which, depending on the evolving negotiations, may put further pressure on the logistics sector to be resilient, innovative and flexible.

In 1474, Gebruder Weiss was founded and up until the early 19th century delivered letters and goods over the Alps to Milan and was the formative logistics company and today remains the oldest courier service in the world. Of slightly younger vintage is the oldest US trucking company, Jones Motor Group which was founded in 1894. Both companies are still operating successfully, having diversified and studied innovative ways of remaining in business in a changing world.

Brexit may mean that to address the common challenges the logistics sector face, to assure and secure their ‘just-in-time supply chain’, companies will need to evaluate what works for them and the most cost-effective solutions, ahead of a yet unknown customs environment. Key elements of international trade in goods, and on which the customs declarations are based (essential for the calculation of customs duties), are the tariff classification of the goods, their origin and their value.

One important factor emerging from the UK’s various proposed new customs arrangements and which has a significant impact if ‘no deal’ is struck; companies will have to be readily able to assist to prove the origin and routing of items they carry, to satisfy customs authorities of the correct ‘rules of origin’ on behalf of customers. Hence, efficient processes that track and secure the items will be a major factor post EU exit.

A customs tool such as the Authorised Economic Operator Scheme (AEO) may be considered by companies wishing to demonstrate the integrity and speed of their supply chain and benefit from the proposed improved frictionless movements from many global fiscal authorities. HMRC considers UK applications for AEO status. The authorisation process tests the applicant’s tax and customs compliance, commercial and transport record-keeping standards, financial solvency and practical standards of competence within the scope of their business activity. The authorisation process takes up to 120 days to finalise.

AEO certification provides a reassuring ‘kite mark’ to potential and existing customers, that the company is sufficiently skilled and knowledgeable in customs and supply chain issues to keep their items moving, whether this is across the USA or over the Alps.

Recognising the need to consider and realign a company’s day to day customs operations may be a key part of planning for the future, not just from 29 March 2019 or up to 31 December 2020, but well beyond these dates.

If you have any questions or if you would like to discuss Capital Allowances with us in more detail, please contact Hannah Farmborough or call on 0207 429 4147 to be put in contact with a member of our Manufacturing team.

This article featured in issue 3 of our manufacturing and engineering newsletter series. Read the full newsletter here: The Engine – Issue 3