Thursday, December 13, 2012

Freight Forwarding Association Advises on Clarification of New Customs Procedures

Forwarders Should Prepare for EU Rule Change in 2015
Shipping News Feature

UK - Forwarding representatives the British International Freight Association (BIFA) tells us that HM Revenue and Customs (HMRC) has recently clarified its policy on authorised economic operators (AEO) for imports and exports taking place following the introduction of the European Union’s new Union Customs Code in 2015. Businesses that meet AEO standards will be able to use a fast-track application process for EU customs procedures, reducing administration costs and many forwarders will already have many of the necessary procedures in place. According to an alert from Customs Duty Manager Stuart Irwin at Grant Thornton, the international tax service company:

“The new policy means that importers and exporters using, or intending to use, simplified Customs procedures, such as inward processing relief (IPR), customs warehousing, temporary storage, temporary admission or community transit, will need to fulfil AEO criteria or face the prospect of having to provide financial guarantees to cover the VAT and Duty suspended under those schemes. Whilst not compulsory, businesses which do not attain AEO status are therefore likely to see significant increases in associated import and export costs.

“AEO is the EU’s contribution to the global initiative to secure the international supply chain for trade in goods and helps to protect the EU’s internal market. Businesses which meet the AEO criteria will have a number of advantages over businesses which do not, and will also be able to use a simplified fast track application process for other EU Customs procedures. For AEO accredited businesses trading with the US under one of the mutual recognition agreements, shipments are far less likely to be examined by US Customs.

“In the longer term, as part of the Union Customs Code (UCC) proposals, AEO accredited businesses may be entitled to use 'self-assessment'. Under this proposed system, importers may be able to reduce their administration costs by, effectively, taking the import function 'in-house'. The ability to make periodic bulk Customs declarations, as opposed to single entries for each shipment, should produce significant time and cost savings.

“Although the AEO system has been around for some years now, businesses in the UK have been slow to recognise the benefits not least because the costs associated with gaining accreditation can be quite high. However, given the recent policy announced by HMRC and the fact that for larger businesses the accreditation process can take anywhere between 18 and 30 months to complete, importers and exporters wishing to become accredited in time for the new UCC need to start the accreditation process sooner rather than later.

“Businesses wishing to attain AEO accreditation will need to undertake a thorough review of import and export procedures. By necessity, an AEO review will need to examine issues such as the security of premises, IT systems, personnel, accounting systems and transportation and will not only highlight current strengths and weaknesses within the supply chain but may also identify opportunities for potential savings of both Customs Duty and import VAT.”

Photo: Courtesy of Giftshop UK.