Isle of Man VAT – again

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I admit that I had been planning not to blog the latest Isle of Man VAT story from House of Commons, but it appears that pressure is being put on me to mention it, so I will. This exchange took place on November 12:

Adrian Sanders (Torbay, Liberal Democrat)

To ask the Chancellor of the Exchequer whether he plans to renegotiate value added tax agreements with the Isle of Man.

David Gauke (Exchequer Secretary, HM Treasury; South West Hertfordshire, Conservative)

We remain committed to ensuring that the indirect tax revenue sharing agreement with the Isle of Man provides the Isle of Man with the revenue that they would collect if they ran a separate indirect tax system.

I do not know Adrian Sanders and have no idea as a consequence whether this question was influenced by this blog, or not.

David Gauke’s response appears open to a wide range of interpretation, so I will offer my own, which is that I think he is saying that the October 2009 deal with the Isle of Man was fair and any attempt by the Isle of Man to change the basis of payment will be resisted. But I am well aware that some will say “you would say that”.

What I do know is that this has attracted some attention in the Isle of Man. For example, the Manx Independent, which does not appear to be available online, has said in an editorial:

The view expressed in Westminster that the Isle of Man should get as much out of the VAT pooling agreement with the UK as it would get if we ran our own indirect purchase tax seems on the face of it quite reasonable.

But our politicians do our sums differently from Richard Murphy, the thorn in the side of the Manx Treasury whose blogs he thinks were influential in scuppering the deal last year.

He says we should lose even more money.


Actually, I would only say that if the facts justified it, and I think they do.

What I also think is that any restatement ofstatistical information cannot be used to justify a higher payment, and I still think that is the motive behind the Isle of Man's restatement of its national income data.

The Manx Independent gives some curious insight into this situation, saying:

Make no mistake,to go it alone and lose the VAT deal would do the island a lot more harm than good.

Interesting. There seems to support my contention that there is a subsidy.

Then they say:

The more transparent the VAT agreement is, [and] the more straightforward its terms the better it will be for us.

We need to ensure that the UK doesn't find another excuse to raid it.

We need certainty most of all.

Well I am all for transparency,but it is an alien concept in the Isle of Man. Nothing that has come out on this deal has originated in Douglas, and although the recent doubt has been the consequence of its actions.

So if the people of the Isle of Man want certainty I will offer some simple advice. First, put all the publications on public record. Second, stop trying to pull fast ones. We don't appreciate them. It's a lesson you have to learn.