SIMON WHITAKER COMMERCIAL HEAD OF SALES UK, IE & INTERNATIONAL MARKETS. Mobile :

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4 SIMON WHITAKER COMMERCIAL HEAD OF SALES UK, IE & INTERNATIONAL MARKETS Mobile : swhitaker@premierfarnell.com

5 ABOUT PREMIER FARNELL Key Facts: FTSE 250 listed company 968Million revenue with operating profit of 93Million Operations in 35 different countries on all major continents Supplying over 150 global industry types Over 2 million customer contacts 70% trade with us via on-line solutions 4,400+ employees 500,000+ electrical and electronic products stocked Same day despatch Global leader in legislation RoHS, WEEE, REACH Main European distribution based in Leeds, UK (1 of 11 globally)

6 Authorised Economic Operator (AEO) An introduction to AEO A Premier Farnell Company

7 AEO What is it? Authorised Economic Operator (AEO) is aimed at providing safety and security into the Supply Chain. To become an AEO, Customs assess a wide range of company activities (e.g. Finance, Site Security, Compliance, Goods In, Picking, Shipping etc.) The main aim of AEO is to stop items that could be used for terrorism getting into the supply chain. Conventional security controls focus on stopping unauthorised goods leaving warehouses. AEO is linked to the Known Shipper programme that concentrates on Air Safety to stop bombs etc being introduced into air cargo.

8 The Vision for AEO The European Union aim to get the majority of organisations who export outside of the EU to sign up AEO. AEO is linked to a World Customs initiative to create chains of safe and secure organisations around the world. The vision is to create world wide chains of Manufacturers, Distributors and Shippers, where goods can be safely sent from a supplier in one country to a customer in another.

9 AEO What progress is being made across Europe? The AEO standard was introduced in 2008 and by October 2009, 1600 EU companies have been accredited. The majority of these are Freight Forwarders and Shippers. In the UK, 107 companies were AEO accredited and around 200 had applied by October Customs takes about 3 months to complete the assessment, which will include a site visit. Premier Farnell (UK) Ltd has made a full assessment of our strengths and weaknesses against the AEO criteria prior to applying.

10 AEO What difference will it make to us Customs benefits As an AEO, we can expect our shipments to be subject to less scrutiny and we will have to provide less data to Customs on our shipments. Trust Agenda Being a safe and secure operator will add to the trust we earn with customers and suppliers. Future benefits are likely to accrue from changes to related EU legislation that favour AEO s.

11 AEO What changes will there be in how we work? Some operational changes for AEO Wearing Badges Challenging anyone you don t know More checks at the gatehouse Rejecting Suppliers who turn up unannounced Checks on infrequent despatch carriers Incident reporting on anything unusual

12 STATE OF THE NATION What s in it for YOU? Substantial amount of business process / work instruction development Benefits for IPR/OPR Goods stopped even with AEO approval

13 Alternatives? Known Consignor Scheme Many of the same benefits as AEO Pre-requisites HR Recruitment processes All staff through aviation training Controlled access to production areas Minimal cost ( 200) 6 week application process

14 SIMON WHITAKER COMMERCIAL HEAD OF SALES UK, IE & INTERNATIONAL MARKETS Mobile : swhitaker@premierfarnell.com

15 Union Customs Code AEO and it s impact A Presentation by Keith Robe International Trade Development Liaison Officer (ITDLO) HM Revenue & Customs

16 Authorised Economic Operator AEO is EU s response to WCO SAFE Framework global standards for Security and Safety in the International Trade Supply Chain. Protective marking Unclassified

17 Authorised Economic Operator (AEO) AEO is increasingly being seen as the standard operating criteria for all customs operators and its criteria reaches across the UCC It s aimed at compliant and trustworthy businesses only who we regard as low risk customers AEO is not a regime, it s a status It s an internationally recognised quality mark which indicates that a business operates within a secure supply chain and their internal controls and procedures are efficient and compliant Protective marking Unclassified

18 AEO who can apply? Anyone involved in the international supply chain & carrying out customs related activities in the EC Includes logistics operators, carriers, freight forwarders and customs agents Normally must be EU established but Airlines/Shipping Companies not established in the EC may apply. Protective marking Unclassified

19 Applicants Responsibilities The applicant should ensure that they meet the criteria prior to applying for AEO. They should ensure that adequate resources are available to facilitate the audit process. Once a certificate is issued, they are responsible for informing HMRC of all factors arising that may influence it s continuation. Protective marking Unclassified

20 Compliance compliance over the past 3 years we need to consider any non-compliance is viewed in context size and complexity of the business type of irregularity serious or repeated infringements remedial actions taken Protective marking Unclassified

21 Records we need to check systems of managing records are satisfactory systems facilitate audit-based customs controls can distinguish customs status of goods size and complexity of business taken into account internal controls in place process for reporting irregular or illegal transactions Protective marking Unclassified

22 Financial solvency we need to check a good financial standing sufficient to fulfil commitments not been subject to insolvency proceedings financial history for past 3 years is good sufficient financial resources to meet liabilities has no negative assets except where it can be proved they can be covered Protective marking Unclassified

23 Security & Safety we need to check appropriate security and safety standards are met focus on the integrity of the sites and building/s their access controls measures for handling goods, information and documentation their business partners screening of prospective employees security training and awareness Protective marking Unclassified

24 Trade benefits of AEO Customs Simplifications Initially limited to streamlining authorisation process for simplifications etc. Enhanced reputation & image The Union Customs Code (UCC) Regulation (EU) 952/ th October 2013 Protective marking Unclassified

25 Trade benefits of an AEO certificate Benefits AEOC AEOS AEOF a) Fewer physical and document-based controls b) Priority treatment of consignments if selected for control c) Choice of the place of controls d) Easier admittance to customs simplifications e) Reduced data set for summary declarations f) Prior notification g) Mutual recognition Protective marking Unclassified

26 Other benefits logistical systems - identify efficiency savings from review of procedures Recognised as secure and Improved corporate governance development of audit culture Improved management of business partners A more cohesive relationship forged with Customs Protective marking Unclassified

27 AEO so what s changing? Two types outlined in UCC: Customs Simplifications Security & Safety AEO standards linked throughout the UCC New criteria for practical standards of competence or professional qualifications Provides many benefits including financial Scope expands to include taxation rules Protective marking Unclassified

28 AEO interaction across UCC Duty deferment Certain guarantee AEO(c) reduction criteria must Movements within a TS be authorisation met between different MS AEO(c) Mandatory Centralised Clearance Self Assessment EIDR presentation waiver Comprehensive guarantee Guarantee reductions/waivers AEO(c) Mandatory Simplified Customs Declarations Entry in declarant s records Certain AEO(c) criteria must be met Valuation simplifications Regular shipping services Temporary storage Authorised weigher Transit simplifications Special procedures Union Customs Code Protective marking Unclassified Union Customs Code 05/08/

29 AEO update EU (includes UK figs) 17,707 Applications received Certificates issued = Germany 6325 Netherlands 1448 France 1179 Italy 916 Poland 746 Spain 629 Sweden 321 Protective marking Unclassified UK 628 applications received Certificates issued = 373 AEO(F) = 305 AEO(C) = 57 AEO(S) = 11 *Figures correct at May 2015 AEO database available on Europa website at

30 Thank you Keith Robe International Trade Development Liaison Officer BP4002 Chillingham House Benton Park View Newcastle Upon Tyne NE98 1ZZ Tel: Mob:

31 AEO Trade Compliance July

32 Authorized Economic Operator (AEO) AEO legislation Voluntary 2007 / 2008 In simple terms required that: Traders evidenced compliance with existing EU Customs legislation, and Across their supply chains Generally through written procedures addressing specific questions Evidencing compliance with mandatory, existing EU Customs (security export control) legislation Customs Assumption Traders already complying with existing laws Is this fully documented? Raised the standard for demonstrable compliance (and real compliance practice) Customs auditing / verification is simpler Union Customs Code (1 st May, 2016): Numerous changes AEO Mandatory guarantee requirement for all non AEO traders wishing to use customs processes such as PCC, IPR, Customs Warehousing, End Use, etc. Guarantee level for non AEO s equal to what would normally be saved... AEO partial exemption / exempt... Professional Standards for employees All business taxation review not just EU Customs 32

33 Driving Behaviour... HMRC approvals/renewals of saving programs delayed examples have seen up to 6 months and increasing Anticipate initial submission returned time period starts again / plan... Gain AEO and fail audit non compliant can t re-apply for 3 yrs HMRC expect AEO (c) Standard now not when UCC is law in May 2016 Client realization of fiscal implications and potential for delay AEO still about benefits Think about continued improvement & management. Control of audits. Client recognition of level of complexity in customs, security, export control legislation and requirement for experienced personnel / professional competency Part of UCC Client sourcing supply chain partners that can provide: AEO status AEO support for Client to achieve Professional competency in the subject matter Commitment to engage Consistency in supply chain / long term support / maintain AEO credibility for HMRC 33

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35 Functional Roles and Trade Compliance Functional Roles and Trade Compliance 35

36 Awareness Subject Areas Trade Compliance Requirements in Functional Roles Functions All Incoterms Functions Engineering, Product Mgrs, Purchasing, Sales, Contracts, Operations, Supply Chain, Logistics, Legal Import / Export Classification Functions Engineering, Product Mgrs, Purchasing, Sales, Contracts, Operations, Supply Chain, Logistics, Customs Valuation Functions Purchasing, Contracts, Operations, Supply Chain, Logistics Country of Origin and Origin Marking for Customs Functions Engineering, Product Mgrs, Purchasing, Sales, Contracts, Operations, Supply Chain, Logistics, End-Use & End-User Identification Functions Purchasing, Sakes, Contracts, Operations, Legal Restricted Party Screening Functions Purchasing, Sales, Contracts, Operations, Supply Chain, Logistics, Finance, HR, Legal Sanctions & Embargoes Functions All Restrictive Trade Practices or Boycotts Functions Purchasing, Sales, Contracts, Operations, Supply Chain, Logistics, Finance, Legal International Trade Transaction Recordkeeping Functions Purchasing, Sales, Contracts, Operations, Supply Chain, Logistics, Finance, Legal 36

37 International Trade Compliance Suite of Services KN Healthcheck An in-depth review of the client s activity focusing on processes and compliance, to mitigate risk From discussions in-house with the client key stakeholders the KN Healthcheck delivers an expansive report for action. The report sets out a timetable with timelines that allows the client to demonstrate progress. The KN Healthcheck provides KN support where our services can provide further assistance, such as training, process delivery. Provides full business compliance awareness Classification of Items Required to determine admissibility, duty rate, preference program eligibility and licensing requirements Import items must be classified according to the Harmonized Tariff System (HTS or HS) Export classification applies in numerous jurisdictions to military and dual use items KN Footprint A single slide view of the client s compliance world. Based on client information Recognises risk and how to control & improve. Can be provided for multi site clients Offers evidence of how a client plans to develop markets & opportunity within compliant processes Market Entry Information. Designed to provide market information at the earliest point to ensure smooth progress in transit Ensures duties, taxes and documentation requirements are known in advance Action plan to meet local challenges avoid delay & cost AEO Gap Analysis Supports clients with Customs processing benefits (Duty & tax relief) Provides detailed report on HMRC AEO self assessment questionnaire with gap analysis risk assessed feedback Offers support through the accreditation process Customs Processing Application Support KN will provide help & support to ensure application for Customs processing reliefs is completed in line with timelines. Training Provision of training support on all compliance aspects KN Processes The ability to provide proven business processes to help manage the client s business. KN Retention KN is able to provide a hot-line support service for clients who need professional assistance on transactions & regulations Trade Compliance 37

38 AEO Trade Compliance Thank you. July 2015

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