Like most people, lawyers love hearing about the misfortune of their competitors. At any industry event, small groups will gather to discuss tales of client problems, partners leaving and firms struggling to get by. But the one exception to this is data leaks. There is no schadenfreude when systems are hacked. Partly because law firms realise that no one is 100% safe.
This is especially true with the Paradise Papers leak. Even Appleby’s harshest competitors are sympathetic – especially as the offshore law firm had to wait for more than a year for the data to come out.
It may not feel like it for those involved, but the Paradise Papers have appeared pretty tame after the Panama Papers (although this is not surprising as Appleby is a very different firm to Mossack Fonseca).
The allegations relating to aircraft have confirmed three things: the rules are very complex; aircraft buyers do not want to pay VAT unless they have to; and EU countries do not have the same tax system (and will not have for many years, if ever).
There has been no evidence of any illegal behaviour and it is probably worth repeating that the Isle of Man Aircraft Registry has nothing to do with VAT (this is something that has been annoying people in Douglas).
While it may make good headlines – especially when a Formula One Champion is involved – none of this is new. Aircraft VAT is also hard to explain and does not lend itself to prime time TV – this is why there is no Netflix drama about aircraft importation (and hopefully never will be).
For the countries and companies involved it has been a bruising period. But these bruises will go. The Isle of Man today retained its compliant rating from the OECD. This is the highest possible score and it is one of only six countries to have this.
The leaks may also offer opportunities for some. One European business jet operator genuinely built a mailing list by researching names in the Panama Papers and no doubt others will do this with the Paradise Papers. Other beneficiaries may include a small online stationary company – ParadisePapersShop.com – and tourism. The coverage of offshore finance centres always includes pictures of beautiful beaches and who does not want to go on holiday to Paradise?