Aviation Law

The Future of the Aviation Industry in the Isle of Man

Author: Nick Kelly

The aviation industry on the Island had seen rapid growth since May 2007 when the Isle of Man Aircraft Registry was established to provide services aimed specifically at private and corporate business jets and helicopters. Until recently, the aviation sector on the Isle of Man was seen as one that was relatively low risk, continuing to grow steadily, with high quality clients. All in all, it has been desirable sector in which to work.

Now, the Isle of Man Aviation Industry appears to be facing some if its toughest challenges since 2007.

The registry has, to this point, been an undoubted success with over 1,000 aircraft being registered on the Island since it first opened its doors, but in the wake of Brexit and the Paradise Papers, its future appears uncertain.

A key part of the registry’s success is that the Island is part of the UK VAT system and, by extension, the EU VAT regime. In short, importing your aircraft through the Isle of Man meant relatively easy access to European skies. Clearly, an important factor for many businesses using aircraft.

This was initially thrown in to doubt once the potential impacts of Brexit started to reveal. If the UK is to leave the single market following Brexit, the Island, being part of the UK VAT system, will also follow.

The media has well documented the potential difficulties this may cause for importing/exporting goods and this extends to aircraft. Depending on the deal agreed, it may no longer be possible for aircraft to fly freely between the UK/IOM and Europe which is a clear concern then for any Continental European business with an aircraft.

More recently, the Paradise Papers highlighted the aviation industry on the Island and, although the Island maintains that it has not allowed any illegal practises to take place here in relation to VAT and the leasing of aircraft, it has clearly caught the interest of the EU who have reportedly written to HMRC expressing their intention to review the VAT practises relating to the supply and leasing of aircraft.

This does not suppose that anything illegal is, or has been, taking place on the Island but, it does suggest there may be EU enforced changes to the VAT rules which could make both the UK and Isle of Man a less attractive proposition than it is currently.

It is not all doom and gloom however.

The registry sells itself on more than just the Island being part of the UK VAT system and is widely regarded as one of the best registries available for a multitude of reasons.

Operated by the Department for Enterprise (a Government department), the registry is a not for profit service which aims to deliver high quality, quick service at a reasonable cost.

The Island’s pro-business Government is showcased well by the registry which ensures there is always someone available and has staff located around the world in order to ensure aircraft can be inspected and approved in the shortest possible time frame.

To this end, aircraft can be located anywhere in the world when being registered on the Island’s Registry and there is no requirement for you or your aircraft to attend the Island at any point before, during or after registration.

So, even if free access to European skies are lost and changes in VAT laws take effect, the Island and its aircraft register will still be an attractive proposition for those not looking to fly in and out of Europe by virtue of its superior service.

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