Your correspondent recently attended ISLEXPO, an event hosted on the Isle of Man that focused on business growth and innovation.

The Isle of Man's chief minister is attending weekly meetings in London to ensure the crown dependency “has a voice” in Brexit negotiations, a government head has told this publication, signalling stability for the Manx wealth management industry after the UK exits the European Union. 

Chief Minister Howard Quayle, who was elected last October, had been liaising with figureheads from the UK government since shortly after he took up his post, according to Simon Pickering, head of on-island development at the Isle of Man government. 

“Our chief minister from the very early days of taking up his post has been engaging on a weekly basis in London, holding conversations to ensure we have a voice [in Brexit negotiations],” said Pickering on the sidelines of ISLEXPO. “There has been an awful lot of work going on behind the scenes, I think it is fair to say.”

Although the Isle of Man is not part of the EU, the UK's divorce from the bloc will inevitably throw up questions marks, as the island's current entitlement to freely move goods within the EU cannot be guaranteed post-Brexit. 

The Future Of VAT Law On The Isle

There is also uncertainty shrouding the Isle's future VAT law.

Once the UK formally leaves the bloc, EU VAT law will no longer apply and will be replaced by UK VAT law. Depending on the terms of the negotiated exit, there may be increased flexibility for the UK government to amend its VAT law, in the absence of over-arching EU provisions. 

However, the UK government could also make changes to VAT exemptions, VAT rates and the scope of reliefs, which would impact the Isle's financial services sector and, therefore, its wealth management industry.

Given that financial services and professional services account for 58 per cent of the Isle of Man's gross domestic product, any risks posed by Brexit must be properly mitigated if the island's economy is to prosper after 2019.

“There are several working groups based in London that also include heads from the other crown dependencies [Jersey, Guernsey],” said Pickering. “One is financial services-related. Another is looking at general trade. Our overall aim is to make sure the Isle of Man has a voice.”

UK Relations

Within weeks of Theresa May taking up her position as Britain's prime minister last July, she wrote a letter to all three crown dependencies – the Isle of Man, Jersey and Guernsey – in which she stated they will be offered the opportunity to contribute “where it is relevant and appropriate to do so”. 

But the Isle of Man is not entirely free to choose the future of its relationship with the EU, and its options will ultimately be limited by the UK's eventual position. 

How this will impact the wealth management industry on the Isle of Man, “it is too early to say,” said Pickering. 

“At the minute, Brexit is a wait-and-see watching brief,” he added. “As a department, we work closely with the Wealth & Funds Association, and the sector is always well supported.”