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Applebys: Something or other about planes and VAT. CM says Panic!

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14 minutes ago, 2112 said:

https://www.manxradio.com/news/isle-of-man-news/chief-minister-expects-vat-apology/

This meanwhile has HRH The Chief Minister incandescent with rage, demanding apologies. What planet is he living on? He should just shut up and put up with the hassle from HMRC, is he going to sue the Guardian? The BBC?

I strongly disagree. He is quite correct to state that "If they were honorouble, they would apologise."  They won't of course. What we'll get is a mention of the finding and then a meander off-topic into other ramblings about perceived avoidance, real or imagined.

What has been shown here on this forum, evidenced by the posts linked back to from the time, is that 30 mins of Googling enabled various non-experts to correctly conclude that the law in question appeared to have been operated as intended. The left-leaning media who reported on the 'scandal' could have easily done likewise. They could have employed credible tax advisors to opine. Instead they opted for false allegations and innuendo. Even more damningly, the EU did likewise, despite the very clear judgement in an EU court, on the basis of advice from the Advocate General. That damns the EU officials involved in that as (at best) incompetent and (more probably) downright dishonest.

HQ is right to protest. He will also be quite entitled in future to respond to any future leftard media tax avoidance articles by opening "Well of course the [insert name of medium] has a history of publishing unsubstantiated, untrue allegations about the IoM, without troubling to carry out proper investigation. They've previously shown themselves not to be repuitable sources on such matters."

There's no need to sue. They've damned themselves and we should continue to point it out at every occasion.

Oh, and there's no 'hassle' from HMRC here. HMRC have acted perfectly properly and rightly concluded that the law had been correctly applied, just as some of us here concluded it had (probably) been two years ago.

 

 

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1 hour ago, 2112 said:

This meanwhile has HRH The Chief Minister incandescent with rage, demanding apologies. What planet is he living on? He should just shut up and put up with the hassle from HMRC, is he going to sue the Guardian? The BBC? I’m sorry HRH but to some people no matter how much rebranding and nice newspaper articles portraying the island as a wonderful family friendly and historic transport holiday destination, some still think the island is a ‘grubby little tax haven’. I’m sorry HRH The Chief Minister but that perception still resonates with some people, and we should expect regular HMRC VAT inspections.

He’s right we should get an apology. 

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2 hours ago, thesultanofsheight said:

He’s right we should get an apology. 

But for what exactly?  He needs to point to statements they made that were untrue and have been disproved by this report.  But this report says that IOMCE had not been diligent enough in checking to see if the use of the planes had been in line with the commercial usage that they were told they were bought for.  Quayle can't dispute this because he claimed back in that infamous press conference that they had started checking up and had reclaimed VAT.  So there must have been some incorrect use, even if it doesn't amount to 'wrongdoing' which would imply that people intended to misuse the system - always difficult to prove.

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1 hour ago, the stinking enigma said:

So why was Howie crapping himself so much in the interview at the time this broke?

I think that clip was deliberately leaked to make him look bad. I don’t think he was crapping himself. He was just very excited about having something high profile and important to do. 

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Because he didn't know we had an aircraft register, what it did and how it worked.

Now he knows and that it is legal and all pucker like, he can add ' I saw the VAT inspector off when he sort to undermine our VAT handling with regards to private jets' to his re-election waffles.

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7 minutes ago, thesultanofsheight said:

I think that clip was deliberately leaked to make him look bad. I don’t think he was crapping himself. He was just very excited about having something high profile and important to do. 

But it wasn't a clip that was 'leaked' it was the whole press conference (and it was validly and openly recorded):

Quayle stumbled through reading the prepared statement and then proceeded to make a fool of himself in the questions.  You're probably right that he was more excited than scared because he lacks the self-awareness to realise what an idiot he appeared.  Though 'excited' may imply more animation than he normally manages, unfounded self-confidence might be a better description.

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25 minutes ago, x-in-man said:

Because he didn't know we had an aircraft register, what it did and how it worked.

Now he knows and that it is legal and all pucker like, he can add ' I saw the VAT inspector off when he sort to undermine our VAT handling with regards to private jets' to his re-election waffles.

It's nothing to do with the aircraft registry - a point even Quayle kept making (badly).  There's a lot of planes that were imported under this VAT scheme that didn't go on the Manx register and loads on it that weren't imported under the scheme.

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41 minutes ago, Roger Mexico said:

There's a lot of planes that were imported under this VAT scheme 

Perhaps I've not  been articulating this well, but I don't see it's right to describe the imports as a 'scheme'. The law was applied in the way it seems to have been intended to apply. The judgement in A-OY explains that the law must work that way if it is to be consistent with the fundamental principle of fiscal neutrality that underpins the common European VAT system (see in particular paras 31 to 35).  If the IoMCE had not accepted that these aircraft imports were properly to be zero rated, that would likely have put the charter airline arrangements in question at an unfair disadvantage in comparison to 'regular' airline arrangements. EU law prohibits that and ensures a level playing field.

Maybe I'm being unduly picky about semantics here. However the context is that various discreditable media sources have seemingly twisted their reporting so as to misrepresent the issue in the minds of those who trusted what they reported, so subtleties of language matter.

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3 hours ago, the stinking enigma said:

So why was Howie crapping himself so much in the interview at the time this broke?

Because he's a panicking pants-wetter without a shred of competence or quality.

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2 hours ago, Roger Mexico said:

But for what exactly?  He needs to point to statements they made that were untrue and have been disproved by this report.  But this report says that IOMCE had not been diligent enough in checking to see if the use of the planes had been in line with the commercial usage that they were told they were bought for.  Quayle can't dispute this because he claimed back in that infamous press conference that they had started checking up and had reclaimed VAT.  So there must have been some incorrect use, even if it doesn't amount to 'wrongdoing' which would imply that people intended to misuse the system - always difficult to prove.

You can read the report two ways. I was skeptical myself but no VAT reclaim, no real direct action or criticism, just a call for more post transaction checks to be carried out - largely because of what I’ve said above. That some of the charter arrangements are probably superficially compliant but that depends on how deep you want to dig into some of the linked companies and air time reselling arrangements of these “airlines”. But I bet the same happens in the UK - as it also does in the likes of Monaco, Cyprus and Malta when it comes to aircraft and yacht chartering structures that aren’t audited by the equivalent VAT inspectors. Lets not forget an element of this is HMRC protecting itself so it has to try to blame us for something as were “offshore” and they aren’t. Do they probably should apologize in some form. 

Edited by thesultanofsheight
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11 minutes ago, Yibble said:

Perhaps I've not  been articulating this well, but I don't see it's right to describe the imports as a 'scheme'. The law was applied in the way it seems to have been intended to apply. The judgement in A-OY explains that the law must work that way if it is to be consistent with the fundamental principle of fiscal neutrality that underpins the common European VAT system (see in particular paras 31 to 35).  If the IoMCE had not accepted that these aircraft imports were properly to be zero rated, that would likely have put the charter airline arrangements in question at an unfair disadvantage in comparison to 'regular' airline arrangements. EU law prohibits that and ensures a level playing field.

Maybe I'm being unduly picky about semantics here. However the context is that various discreditable media sources have seemingly twisted their reporting so as to misrepresent the issue in the minds of those who trusted what they reported, so subtleties of language matter.

I was using scheme in a rather broad way - regime might have been a better word.  But IOMCE were clearly making a feature of the speed and convenience with which they processed the paperwork and the fact that the VAT 'reclaim' was instant.  In other words no payment needed to be made.  None of which is illegal or even improper.  The real question is whether this enabled future improper use (or rather non-use - ie the planes weren't hired out generally) and whether IOMCE were diligent enough in checking whether this was happening or if they turned a blind eye.  And it's admitted that they didn't do much up to 2016.

It's true that there has been some misunderstanding in the media of the various issues surrounding this.  The Panoramas in particular were pretty shoddy even from their own point of view and confused all sorts of different issues together[1].  But it's also misleading to claim this report totally clears IOMCE,  people were allowed to import jets VAT-free and then get away with using them as personal transport only.

 

[1]  Despite its reputation, the BBC has never been that good at investigative journalism and Panorama has been a joke for decades.

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4 hours ago, the stinking enigma said:

So why was Howie crapping himself so much in the interview at the time this broke?

He didn't perform very well, but I think it's a little much to expect the CM to gain within a day (due to the pressure to respond to the ultimately unfounded allegations) detailed knowledge of the operation of something as complicated as VAT on business jets.

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20 minutes ago, Roger Mexico said:

people were allowed to import jets VAT-free and then get away with using them as personal transport only.

Has that been established?  Perhaps it has, but I don't recall seeing such. That could just be poor recollection on my part.

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17 minutes ago, thesultanofsheight said:

You can read the report two ways. I was skeptical myself but no VAT reclaim, no real direct action or criticism, just a call for more post transaction checks to be carried out - largely because of what I’ve said above. That some of the charter arrangements are probably superficially compliant but that depends on how deep you want to dig into some of the linked companies and air time reselling arrangements of these “airlines”. But I bet the same happens in the UK - as it also does in the likes of Monaco, Cyprus and Malta when it comes to aircraft and yacht chartering structures that aren’t audited by the equivalent VAT inspectors. Lets not forget an element of this is HMRC protecting itself so it has to try to blame us for something as were “offshore” and they aren’t. Do they probably should apologize in some form. 

On the contrary we know there were VAT reclaims because Quayle said so himself in that press conference.  I suspect there have been many more since due to then as that was based on a fairly small sample.  You're no doubt correct that the same rigorous checking up hasn't been done elsewhere either (indeed the EU action is probably more aimed at abuse in the yacht market by Italy and Malta etc) and it's clear from the report that those writing it learnt a lot about the way the system was working and were keen to do more on that in the UK and the rest of the EU.

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