“957 Business Jets In The Isle Of Man Seems A Bit Excessive”
“Mr Speaker, 957 business jets in the Isle of Man seems a bit excessive for any island anywhere,” said Jeremy Corbyn, the leader of the UK opposition during Prime Minister’s Questions in the House of Commons this week. “I hope it is investigated and that tax is collected from those people trying to avoid it.”
In case you missed last week’s email, Appleby, a leading offshore law firm, had a data breach last year. This data has made it into the hands of the International Confederation of Investigate Journalists, and one of the areas they are focusing on is VAT on business jets imported into the Isle of Man. The story is expected to break on Sunday.
Appleby told Corporate Jet Investor that it did not advise on the importation of business jets. Instead this was handled by Estera, a trust business that was spun off in a December 2015 management buyout.
“We would like to clarify that Appleby does not undertake VAT aircraft registration work. In fact, under the sale agreement of our fiduciary business to Estera, this was specifically reserved for Estera,” said Appleby in a statement.
But a spokesman for Estera said it was “wrong” to suggest the company gives advice on importing business jets.
“It is important to stress that Estera gives no advice whatsoever, legal, tax, structuring or otherwise, to clients,” he said. “Estera requires all clients to obtain independent advice prior to the establishment of any aviation leasing structure. Estera expects the client to obtain assurances from its advisers that the structure is tax compliant and otherwise suitable to the client’s circumstances. We operate in close cooperation with our regulators and in line with all relevant regulations currently in force in the Isle of Man and other jurisdictions.”
The leaks are clearly worrying for anyone involved in Isle of Man transactions – including ones that do not involve VAT. It is worth stressing that the success of the Isle of Man Aircraft Registry is not because of tax avoidance. Corbyn was referring to the number of aircraft registered in the Isle of Man Registry. The VAT allegations only involved 262 aircraft and not all of these are M-Registered.
It is not a good story for European business aviation and is likely to lead to investigations in other countries – with other tax authorities all over the world following the story. How damaging the leak is to business aviation will largely depend on what other allegations are made on Sunday.
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