Isle of Man Ship Registry Featured in Financial Times
The Isle of Man Ship Registry is highlighted in a special Financial Times special report on the British Crown Dependency:
Overseas delegations seek out local expertise in Isle of Man
by Andrew Bounds
From Fletcher Christian, who led the mutiny on the HMS Bounty in 1789 and settled on Pitcairn Island, to John Quilliam, Admiral Nelson’s lieutenant at the Battle of Trafalgar in 1815, Manxmen have long made a living from the sea.
Now, as well as joining ships they are registering and running them, in a successful venture to diversify the financial services industry.
The Manx shipping register, established in 1984, recently overtook Germany to become the 14th largest in the world by tonnage. Growth in the number of vessels and tonnage took off after 2000, more than doubling to 540 at the end of March, 2014, with 16.3m tonnes.
Dick Welsh, director of the ship registry, points out it is on the international white lists maintained by maritime organisations in Paris and Tokyo.
There are no tonnage dues or annual inspection fees and the annual registration is £1,400, far below those of other jurisdictions. Flags of convenience such as the Marshall Islands can charge $100,000 for the largest container ship.
“We are not here to make money. We are here to attract business for companies on the island,” says Mr Welsh, a former sailor.
Law firms, trust companies, banks and accountants are involved in registering ships, arranging mortgages, setting up companies to own them, insuring them and hiring and managing the crew.
There are 580 people working in the industry on the island. About 100 work in the racier but smaller superyacht industry. There are 100 on the register, which opened a yachting section a decade ago.
Mr Welsh says there was competition from Gibraltar, which can also fly the famous red ensign, and Malta, but Cyprus was losing ground after its financial woes.
The island is heavily promoting the register abroad, with a delegation from China visiting recently, after a trip by Allan Bell, the chief minister, to the country.
“Maersk, Bibby Line and BP do all their crewing from here,” he says. He said the attraction in the 1980s was avoiding higher national insurance contributions required by the EU. “The reason they are here now is the expertise.”
John Nugent, managing director of Equiom Solutions, agrees.
It advises on VAT registration, the implications of bringing a yacht into EU waters, and ownership structures. “We have developed niche services. We have expertise dealing with very expensive assets and tax structures. But tax is secondary. It is expertise they are looking for.”
Despite the recession, the number of very rich people has grown, as has their individual wealth. “There is a growing class of very wealthy people and they want to spend on luxury assets and they need people to take care of them.”
About £3.2bn of UK property is owned via Manx companies.
Mr Nugent says that, as governments seek to increase their tax revenue dealing with moveable assets, such as yachts and aircraft, has become more complicated. As they move from one country’s waters to another, they are increasingly being assessed for tax. “It is a minefield,” he says.
Rules that enable VAT to be written off over the lifetime of the yacht as depreciation are also being challenged.
Many client referrals come from London law firms, but Equiom has established offices in other jurisdictions such as Jersey and Malta.
“We find the Manx government is customer-friendly, from the shipping and aircraft register to customs and excise. Many would rather deal with the Isle of Man than the UK, which is more impersonal,” says Mr Nugent.
A newer venture is the aircraft register, which celebrated its seventh birthday in May. Hartley Elder, director of civil aviation, says: “For the past five years, we have registered more than 100 aircraft a year, or on average two aircraft a week – quite an achievement when considered against the economic backdrop during the period.”
There are almost 700 aircraft on the register, with the number of business jets rising year by year.
The net figure is 433, as owners deregister older aircraft. Commercial airliners also come on and off the register, as they are often “parked” there between leases.
Both registers are holding events as part of the International Festival of Business, the UK’s largest business event since the Festival of Britain of 1951. The 50 day festival, in June and July, is based in Liverpool.
Mr Welsh says: “We have a great relationship with London, but Liverpool is very close and has a big shipping industry, so we will be making the most of the opportunity.”
This article appears on page 4 of the report.
