Isle of Man special: Crossing the ts and dotting the is on super yacht and private jet ownership

Date: 18 Sep 2009

Citywealth

The world of super yachts and jets is a fun one filled with champagne, pretty women, sun tanned hunks and lots of uber destinations like Monaco and Cannes. Why wouldn’t rich list clients want to participate in such adventures? But what client contemplates the paperwork and potential run in’s with customs and excise after the rush of the purchase?

The recent conference event held by Isle of Man Ship Registry delved deep into the registering mechanics and problems that can make your clients run aground.

It was attended by a mix of lawyers, accountants, government bodies, marine specialists and even a client or two. Captain Will Kaye (pictured) who sails the world – winter Caribbean and summer the Med’ – on Big Aron (also pictured left) attended and said of his extremely large yacht, which earns ¬£195,000 a week in charter fee’s: “Our corporate structure is fairly typical of an IOM commercially registered yacht with a non EU owner. IOM flag, IOM owning company, (Tango Bravo Maritime Ltd) , VAT paid certificate. We are commercially registered and as such are a business. The beneficial owner does use his boat and does so under a charter contract.”

Then added: “I went along to the IOM Yacht and Aircraft Conference to keep up to date with current UK and IOM legislation, corporate structure, registry, VAT and crewing issues both to ensure that Big Aron continues to operate as an efficient commercial business but also to gather more knowledge to ensure that the IOM is the flag of choice for the owners new build project.” (A 68m yacht on the drawing board).

Martin Redmayne of The Yacht Report headed up the day and added some flair and merriment to the proceedings which included discussions on the changes in the law for boat design to give crew more space; crew wages and benefits and the nightmare of having customs and excise check papers and conduct an investigation.

The conference offered a case study on typical owners of super duper yachts and charged the presenters with finding solutions to enable their clients lives to continue with only champagne and fun party concerns.

One case study looked at “Claude Clement” a Swiss National, resident in Switzerland with assets of USD3.8bn. Aged 57. With extensive business ventures, children, grand children and thoughts about setting up a family office, he also wanted to buy a 50 metre yacht and an Embraer Legacy 500 jet for personal use.

John Spellman, Isle of Man Finance and Paul Martin, Deputy Assessor, Isle of Man Income Tax at the Isle of Man Government firstly pointed out the stability of IOM—not a bad time to point this out when rumours of offshore islands also having to take bail outs, like banks, are starting to surface.

IOM say they have a GDP of ¬£1,82bn (2006) and a Standard & Poor’s and Moody’s AAA sovereign credit rating. Financial services accounts for approx 40% of income. Shipping and aircraft agreements are in line with their OECD white listed countries and they are awaiting ratification with France and Germany.

Andrew Roy, Principal at Baker Tilly Isle of Man Maritime Services, Katherine Ellis, Senior Manager Equiom Yachting and Aviation, Toby Ward, Partner, Dickinson Cruickshank and Hannah Cash, Solicitor at Rooks Rider discussed corporate structuring. One point made was that if debt is involved then registration of the yacht will be approved by the financial institution offering the loan: registration has an impact on the perceived safety of the loan. The twelve key jurisdictions for registration are Cayman; IOM; BVI, Channel Islands; Malta; Marshall Islands; St Vincent and Grenadines; Gibraltar; Luxembourg; Barbados; Bahamas and Italy. Although it was generally agreed that Luxembourg and BVI were in practice less easy to deal with than other jurisdictions.

Common sense points were also made about registration. Pick jurisdictions in the right time zone with English language capability also.

Our speakers recommended a trust structure for “Claude” and said considerations would centre around insurance, IP rights, costs of on going administration and the location of the assets.

James Lawson, Partner, Hill Dickinson, took the helm for the registry and flagging chat with Dick Welsh, Director, Isle of Man Ship Registry, Steve Malley, Director Intertrust Yacht & Aviation Group and Robert Tobin, Director of Dohle Yachts assisting with questions and specific topics. Of the points noted‚Äîthe eighty four day rule for chartering privilege came up, cabotage (transport of passengers within a country) with Greece being noted as a very difficult country to deal with possibly for protectionist reasons. Attendees were warned against registering in Liberia because it “always gets investigated” and French customs, we were told, are jumping on boats asking for papers to try and prove “excessive beneficial use” when a boat is listed as a commercial charter (because it can exempt owners from VAT payments if laws are properly followed for commercial charter).

France was also considered to be ahead of the game with their yacht mooring policies which the marine industry believe have helped them steal a march on the rest of Europe and bought many benefits to their shoreline with burgeoning shopping and lifestyle spots for the wealthy.

Andy Jack, Principal Surveyor, Isle of Man Ship Registry, Lucy Medd, Crew Manager, Burgess Yachts and Robert Tobin, Director, Dohle Yachts also had their say on crewing which seems to be an area where owners can be forgetful. New laws will mean cabin redesigns for crew and the MLC 2006 regulation 4.5 will bring sea workers benefits into line with shore workers. Lucy at Burgess yachts recommended setting up crew management offshore to mitigate social security.

Doom and gloom pervades the industry with regard to enforced cabin re designs for crew and the space that this will take up particularly on sailing boats. There was one suggestion that crew switch to guest rooms/deck areas for certain periods to help alleviate this need. One commentator said it actually was good news “staff can test guests rooms before they are used.”

To finish the conference, sophisticated drinks and canapés were served by the Barclays host.

After that, for any who still had questions about the benefits of using the IOM for registry, an obligatory “after party” continued at the Slug & Lettuce, Canary Wharf. As to “Claude” the Swiss uhnw case study with both yacht and jet purchases in his sights, many competent solutions were offered. The upshot of the conference day and evening was that IOM certainly did put themselves forward as a jurisdiction of choice and one that can ably deal with the wealth management market and the toys of their wealthy, private clients.

www.isleofmanyachtforum.im

Speakers were:

Andy Jack, Principal Surveyor, Isle of Man Ship Registry, James Lawson, Partner Hill Dickinson based in the London office, Lucy Medd, Burgess Yachts, Toby Ward, Partner & Head of London, Dickinson Cruicshank, Dick Welsh, Isle of Man Marine Administration, John Spellman, Director, Isle of Man Finance, Martin Redmayne, Conference Chairman, Stephen Mann, Gough Advocates, Brian Johnson, Director of Civil Aviation, Isle of Man Government, Roger Nightingale, Economist speaker at the event, Katherine Ellis, Senior Manager, Yachting and Aviation, Equiom, Hannah Cash, Solicitor, Rooks Rider, Sandra Skuszka, Manager—VAT, KPMG, Chris Michael Allix, Dominion Marine Corporate Services.