Exertis the first broadliner to gain AEO status to 'ride Brexit wave'

Authorised Economic Operator accreditation was instigated by Brexit but has many other benefits, says distie's execs

Exertis has become the first UK broadliner to obtain authorised economic operator (AEO) status, which it says will help it weather any Brexit-related trading disruptions.

The AEO is an internationally recognised accreditation granted by HMRC that places a trusted trader status on an organisation, confirming its role in the international supply chain is secure and that customs controls and procedures meet EU standards.

Exertis is the only broadline IT distributor to hold the accreditation in the UK, with Westcoast claiming that "management consider this will not be effective in speeding up customs procedures".

Richard Purdy, Exertis' head of internal audit and Heather Carmichael, tax manager at the broadliner, explained the rationale behind the move to CRN.

"Having that AEO accreditation aligned with our Brexit strategy and it is also something that professional advisers who we were working with were advising corporates to consider as part of their Brexit strategy," said Purdey.

"One of the key advantages means that for trusted traders a lot of the paperwork and bureaucracy associated with imports and exports will be moved away from the frontier and done at office-level rather than when we turn up at ports with stock.

"It's basically the government saying ‘we trust you, we've checked your processes, we've audited your systems and agree that you are compliant and well-managed with the right governance in place'."

Exertis is among nearly 800 UK businesses to be granted the accreditation, including fellow distie Midwich.

The AEO certification does not span the entire Exertis group, as it can only be granted on a country-by-country basis.

"The actual AEO accreditation is for Exertis UK only... it does help the general intergroup trade because it's facilitating the goods into and back out of the UK," said Purdy.

Exertis' application to be an AEO was propelled by Brexit and to avoid the potential repercussions of a no-deal scenario on the initial 29 March deadline.

Despite the leave date's extension to 31 October, the distributor is maintaining the strategy it has put in place though Purdy said that the likelihood of a no-deal scenario taking place in October has reduced.

"Throughout the process, our strategy has been to plan for a worst case scenario but in doing so retain the max degree of agility, so where possible to avoid incurring expenditure on planning activity that would ultimately prove to be wasted," he said.

"The general feeling is that we retain the plan that we've already undertaken and wait and see.

"We've not unwound our contingency planning at all but at the moment we are thinking that the prospects of a no deal at the end of October has reduced in probability, so we are not expecting to take additional steps under there is further clarity."

Carmichael added that though the initial deadline has come and passed, there are still benefits to be had from having AEO status as it is not restricted to just the EU.

"As a large business that is becoming increasingly international, it's almost the standard you'd expect of a business of our size and nature," she stated.

"Our main instigator was Brexit, but I still think it is a no-regret decision because there are other complementary business benefits from tax compliance and general operating perspective as well.

"Brexit was a key driver for us and we feel that having it will help us ride the Brexit wave."

The process from beginning the application to the eventual approval or rejection of it from HMRC can take between nine to twelve months, but Exertis managed to expedite the process in nine months.

"We were already starting from a reasonably strong base in terms of the quality of our processes so it was more a question of documenting and testing those to make sure everything was working properly," explained Purdy.

"It aligns with our broader strategy of being a blue-chip company with first-class processes, so this is evidence of that and helps us to maintain that quality.

"We probably wouldn't have initiated the application as early as we did, had it not been for the pressures of Brexit, but it's a positive thing even if there isn't a no-deal Brexit."