It has been common for taxpayers to seek to save VAT on the cost of acquisition of a yacht by ensuring that the yacht is acquired by a company in the Isle of Man. If the Isle of Man company could show that it intended to use the yacht for business purposes it would not incur any irrecoverable VAT on its acquisition of the yacht. In the past, it is understood that the VAT officials in the Isle of Man were prepared to accept that the Isle of Man company was registerable for VAT even if its business of letting the yacht was fairly flexible; it was not uncommon for an Isle of Man company to be registered for VAT where the yacht was to be let for part of the year but when not being let the yacht was available for the use of the owner of the company (“the Owner”).

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