This guidance explains how VAT applies to the Isle of Man (IOM) and how this affects the control of UK businesses with establishments in the IOM and IOM businesses with establishments in the UK.
Throughout this guidance any references to the Act, sections or schedules are to the Value Added Tax Act 1994 (VATA 1994), unless otherwise stated. Statutory Instrument is abbreviated to SI.
The VAT policy team with overall responsibility for this guidance is VAT International, whose address is:
100 Parliament Street
The address of the IOM VAT Office is:
Isle of Man Customs & Excise
PO Box 6
Isle of Man
All correspondence must be addressed to the Collector.
Addresses of other HQ Divisions and Sections referred to in this guidance are:
International Mutual Assistance Team
Custom House Annexe
32 St Mary at Hill
International Debt Unit
Accounts Office Room B3:15
St Mungo’s Road
Purpose of guidance
This guidance explains in detail how VAT applies to the IOM and the practical effects of this on the control of UK businesses with establishments in the IOM and IOM businesses with establishments in the UK.
There is a general explanation of the relationship between the UK and IOM for VAT purposes at paragraph 4.7.2 of The VAT Guide (HMRC website)
Care in dealing with revenue matters
The IOM is not part of the UK and the common tax area between the two countries results from an agreement between the UK and the IOM governments. Because of this you must be especially careful when dealing with matters affecting the IOM. This includes disclosure (see VIOM03600).
You must ensure that the procedures mentioned in this guidance are carefully observed and seek advice from the appropriate HMRC Policy Team if any question arises concerning matters not covered in this guidance.
UK VAT law does not apply in the IOM but the tax is chargeable under Manx law which generally parallels UK legislation. VAT is collected in the IOM under the Value Added Tax Act 1996 (of Tynwald).
On 1 April 1980 the IOM formed its own Customs and Excise Service and responsibility for collecting VAT was passed to them. The IOM Customs and Excise Service is accountable to the Treasury of the IOM Government.
The administrative arrangements between the UK and the IOM are contained in the Customs and Excise Agreement 1979 (as amended) and relevant extracts are reproduced at VIOM04000. In the UK the Agreement was implemented by the Isle of Man Act 1979. Section 6 of the Act relates to VAT and is reproduced at VIOM05000.
The spirit of the agreement between the UK and the IOM is that IOM legislation will continue to generally parallel UK legislation and procedures, so maintaining a customs union and common indirect tax area.
Isle of Man Customs & Excise is self contained for the administration of VAT, although they are required to follow and implement UK policy and practices a separate register of those businesses registered for VAT in the IOM is kept at the Isle of Man Customs & Excise address which is also responsible for the control of Manx registered businesses. However, staff at Isle of Man Customs & Excise receive copies of all UK VAT notices, leaflets, UK departmental guidance, and are free to seek advice from HMRC policy teams on all aspects of VAT.
In addition to VAT, other common shared duties between the IOM and UK are hydrocarbon oils, excise duty on alcohol and tobacco goods. However, there are some taxes and duties that are not shared (eg air passenger duty and machine gaming duty) or implemented in the IOM (eg climate change levy, insurance premium tax and aggregates levy).