Authorised Economic Operator  Criteria - Compliance
Source: gov.uk (2025-07-17)

Information on Authorised Economic Operator Criteria - Compliance.

7.1 General

This section explains the conditions applicants must adhere to and the verification tests that HMRC will carry out to ensure applicants fulfil the compliance criteria of Authorised Economic Operator (AEO).

HMRC will examine applicants record of compliance with customs and tax requirements over the last 3 years preceding the date of the application, including:
- Customs Duty
- Excise Duty
- VAT
- PAYE
- National Insurance
- Corporation Tax
If the business has been established for less than 3 years, it’s compliance will be assessed on the basis of records and information that are available.

HMRC will assess whether a serious infringement or repeated infringements of customs rules have been committed by any of the following persons:
- the applicant
- any other responsible person involved in the running of the business
HMRC will take into account any customs authorisations that have been withdrawn or revoked and the reasons for that withdrawal or revocation.

Applicants will also need to demonstrate they have:
- procedures in place to identify and disclose any irregularities or errors to HMRC and, where appropriate, other regulatory bodies
- taken the appropriate remedial action when irregularities or errors are identified
- procedures to report any customs business changes to HMRC within 30 days of them happening
- satisfactory procedures for handling controlled goods for example, military goods or technology, dual use goods, excise goods, dangerous goods, hazardous materials or CITES
If the applicant has made errors over the past 3 years in their customs or tax affairs.

HMRC will consider:
- irregularities or errors as a whole and on a cumulative basis
- their frequency to establish if there is a systematic problem
- whether they are material in relation to the size of the business
- if there was any fraudulent intent or negligence
- if the applicant took any remedial action to prevent or minimise future errors
- if errors are negligible or have impact on operation of customs rules
Once an error has been identified, applicants are expected to have taken steps to ensure that it does not happen again or, at least, to ensure that it is immediately remedied if it does arise. Failure to take such steps could count against the application.

Besides assessing the compliance of the business itself, HMRC may also look at the previous compliance records of the following persons:
- company directors
- the company secretary
- solicitors and lawyers directly employed by the applicant
- those directly responsible for the import/export of goods
Any errors made by third parties acting on behalf of a business reflects on the business.

It is important that any third parties that act on behalf of the business are aware of the standards that the business operate to, that they are given clear instructions and that systems are in place so that any problems are immediately identified.

7.2 Infringements of minor importance

It is not possible to give definitive information on what types of errors would be considered as having no significant impact on the customs rules as circumstances differ from case to case, but the following examples would not normally count against an application:
- any errors that have been voluntarily disclosed to HMRC
- any decisions which have been overturned by tribunal or departmental review
- one-off debts incurred for non-compliance with a condition or obligation of authorisation
- where a civil penalty has been issued for a minor irregularity
7.3 Repeated infringements

Once an error has been identified, the business is expected to take steps to ensure that it does not happen again or, at least, to ensure that they are immediately remedied if they do arise. Infringements which initially appear minor may indicate poor management within the company if not addressed by the business. Failure to take such steps could count against an application.

7.4 Serious infringements

HMRC will take into account any deliberate actions, which it understands to be serious infringements.

a) Nature of the infringement

An infringement will be considered a serious infringement of the customs legislation and taxation rules if it resulted in the imposition of a significant penalty or referral to consider criminal proceedings.

b) Deliberate actions

Deliberate intent or fraud, which means non-compliance proven to be with full knowledge and intention, should be considered more serious than the same action under other circumstances, even if the nature of the error could be considered to be ‘of minor importance’. This will be the case whether the knowledge and intent was held by the applicant, the person in charge of the applicant or exercising control over their management, or the person in charge of the applicant’s customs matters.

c) Obvious negligence

When considering whether an act carried out by the business is obviously negligent HMRC will take into account, the complexity of the customs legislation and the care taken by the business along with their experience. If a business is considered to have been obviously negligent, this may also indicate that an infringement may be serious.

d) Serious risk indicators

Serious infringements could also be those that whilst not fraudulent are so important they are considered a serious risk indicator with regard to security and safety or customs, taxation rules and criminal offences relating to the economic activity.

7.5 Serious infringements of Customs legislation

HMRC will consider the specific circumstances of each case, but the following examples could be considered to be serious infringements:
- smuggling
- fraud, for example deliberate misclassification, undervaluation and overvaluation
- false declared origin to avoid payment of customs duties
- infringements related to Intellectual Property Rights (IPR)
- fraud regarding antidumping regulation
- infringements relating to prohibitions and restrictions
- counterfeiting
- any other offence related to customs requirements
7.6 Serious infringements of Taxation rules

HMRC will consider the specific circumstances of each case, but the following examples could be considered to be serious infringements:
- tax fraud
- tax evasion
- criminal offences relating to excise duties
- VAT fraud
7.7 Serious criminal offences relating to the economic activity of the applicant

HMRC will consider the specific circumstances of each case but the following examples could be considered to be serious criminal offences:
- bankruptcy (insolvency) fraud
- any infringement against health legislation, for example placing goods of unsafe nature on the market
- any infringement against environmental legislation, for example illegal cross-border movement of hazardous waste
- fraud related to dual-use regulation
- participation in a criminal organisation
- bribery and corruption
- fraud
- cybercrime
- money laundering
- direct or indirect involvement in terrorist activities, for example, carrying out any business or other activities that promote or assist the internationally recognised terrorist groups
- direct or indirect involvement in promoting or assisting illegal migration to the UK
7.8 Compliance sector wide and specifics

Many businesses, especially those using inward processing or customs warehousing, are involved in ‘ex-works’ contracts by which the third country customer collects the goods and makes all the arrangements for re-export. Applicants must ensure through their contractual arrangements with their customers that these customers follow their standards and are aware of any customs requirements relating to export and re-export. Businesses must also be aware that errors made by them may reflect on applicants compliance record.

7.9 Compliance with other government departments (OGDs) and other authorisations

Other government departments issue authorisations governed by customs legislation, for example strategic exports. If the issuing Government Department suspends or revokes an authorisation HMRC will take this into account when reviewing the compliance of a business.