CJI Americas 2020: Guernsey quarantine forces new transaction closure solutions


Brokers have been forced to implement innovative solutions to help close aircraft transactions, after Covid-19 prompted Guernsey to implement a 14-day quarantine period which halted sales, according to Adrian Parcell-Jones, chartered tax advisor and director, Martyn Fiddler Aviation.

Traditionally many transactions are closed in Guernsey, Channel Islands thanks to its position outside of the EU’s VAT territory and the UK. However since the outbreak of Covid-19, Guernsey has implemented a 14-day quarantine period for anyone arriving in the island, unless you waited in the aircraft on the ground for up to six hours.

Speaking at Corporate Jet Investor’s Americas 2020 conference Parcell-Jones told delegates: “The alternative is to export the aircraft, where we have a non-EU VAT closing. So, we export the aircraft to Guernsey and then fly it as an exported aircraft into a customs warehouse in the UK. There you can spend as long as you like to close, to register, to do all those things you need to do. So it’s a different solution and it solves the Covid impact on Guernsey.”

In pre-Covid times, the variables in a transaction like timing issues for the arrival of foreign funds or if the aircraft was to go tech on the ground were still concerns for all parties involved but not to the same extent. Hence the creation of a no-VAT environment in the UK. Parcell-Jones noted that this will continue to be possible beyond Brexit too.

Aoife O’Sullivan, lawyer and partner, Aviation Law Firm, told delegates: “You have to adapt. All of the tried and tested routes don’t necessarily work anymore. We had a transaction recently where the seller took the aircraft to Guernsey and they flew a PC-12 down to pick the pilots up to avoid them being quarantined for too long and the aircraft was basically left for the buyer to come and pick up.”

Last year, the whole team involved in the transaction would be there for closing – now that’s not possible. The time pressure has increased too, O’Sullivan said her record for a closing call now was four minutes.

Another challenge presented by Covid-19 is the difficulty in flying in designated airworthiness representatives (DAR) to aircraft locations. Oliver Stone, MD and founder, Colibri Aircraft, told delegates: “As a general rule of thumb a good DAR is as valuable to a deal as just about anybody else. A difficult DAR can upend everything at the closing.

“Good ones are in very high demand with a lot of aircraft to see. If you were to say come to my quarantined country to look at my one aircraft — they won’t. Why would they risk the rest of their business? So, it is a big issue right now especially towards year end.”