HM Treasury publish positive review of the VAT treatment of aircraft and yachts in the Isle of Man

Her Majesty's Treasury have published the results of their review into the VAT treatment of aircraft and yachts in the Isle of Man and crucially have found no evidence of abusive practices that would be contravention of EU VAT legislation.

The review follows the launch of infringement proceedings in November, 2018 by the European Commission against the Isle of Man concerning the VAT treatment in the Isle of Man of the acquisition, leasing and leasing for the purchase of aircraft.

The review's report was published earlier today, the 16th October, 2019, and examined not only the VAT treatment of aircraft in the Isle of Man but also the treatment of yachts as well.

The report found that UK and EU VAT law had been correctly implemented in the Isle of Man and allegations of widespread VAT avoidance on aircraft and yachts were not upheld.

The report finds that the Isle of Man Government carries out extensive and effective compliance checks during VAT registration but should implement further compliance checks in the years after registration to ensure that the right amount of VAT continues to be collected. The Isle of Man Government has already started to implement improved compliance procedures in light of these recommendations.

The work carried out by HM Treasury has also highlighted the complexity in international VAT rules and the report notes that there may be merit in a wider review of these rules if EU member states and other jurisdictions deem that more tax should be collected on these activities.

In a statement, the Financial Secretary to the Treasury, Jesse Norman said:

"This is a matter of considerable public importance, and the Isle of Man government rightly agreed to a full review.

I am pleased to confirm that the reviewers have found no evidence of widespread VAT avoidance. However, the Isle of Man government is taking action to improve its post-registration checks as a result of the review. My officials look forward to working closely with them to provide advice and guidance throughout the implementation and in the future."

The Isle of Man is a UK Crown Dependency and has sovereignty over its tax system but under the Isle of Man Act 1979, it must apply VAT rules in a very similar way to the UK. It is the responsibility of the Isle of Man to assure those rules.

A copy of the report can be accessed through our website on the following link:

HM Treasury’s review of the Isle of Man Customs and Excise’s administration of VAT in relation to aircraft and yachts

For further information concerning the report or to learn more about aircraft registration and/or importation in the Isle of Man please do not hesitate to contact us.

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