Isle of Man: Harry Potter And The Request For Tax Information

Last Updated: 19 October 2016
Article by Annemarie Hughes

The Isle of Man's first Tax Information Exchange Agreement ("TIEA") case has provided guidance on the position in Manx Law in respect of tax information exchange requests . The case involved a request from HMRC to the IOM Assessor of Income Tax (the "Assessor") pursuant to the IOM/UK TIEA, but the principles apply to TIEA requests generally.

TIEA Procedure

Ordinarily, pursuant to a TIEA request, the Assessor will exercise the powers to request information under the Income Tax Act 1970. In practice, the recipient in the Isle of Man, for example a bank or fiduciary services provider, will be issued with an initial 'precursor letter' requesting certain information and documentation believed to be in its possession or power. The precursor is required by law to provide the recipient with an opportunity to consider the request.

The precursor letter is not binding on the recipient and has no compulsion of law. If a bank or CSP were to comply with a request at this stage, they put themselves at risk of a claim for breach of confidentiality.

Following the precursor letter, the Assessor will issue a formal notice requiring the information and/or documentation to be provided within 30 days.

It the information is not provided within that timescale, the Assessor can apply to the Court for an order compelling the recipient to comply with the request. It is this procedure that was invoked in this case, although prior to the final hearing the parties reached an agreed settlement.

Wide ranging request?

In this case (Assessor of Income Tax v Holmcroft & otr (CHP 16/0024), although the Defendants did not disagree that the Assessor had the power to issue the request, they were concerned both at the broad scope of the request and to ensure that the Assessor had correctly assessed the accuracy and legitimacy of HMRC's request.

No black holes

In delivering his judgment and providing guidance in this increasingly significant area of law, His Honour The Deemster Doyle, First Deemster and Clerk of the Rolls, commented that, "the Isle of Man has now for many years recognised its responsibilities to the international community and cooperated with overseas authorities" (Paragraph 53).

In recent years, a number of judgments have affirmed that position and stressed that, in the Isle of Man, "there is no blanket concept of confidentiality to cloak irregular financial dealings" (Page 227; Tucker 1987-89 MLR 220), and that, "Those endeavouring to make use of the equivalent of Harry Potter's invisibility cloak to prevent sight of information or documents regarding the proceeds of wrong doing will find, to their disappointment, that it does not work in this jurisdiction" (Deemster Doyle, Wine v Wine (judgment 29 May 2007, Paragraph 72)).

Further, Deemster Doyle has previously stated that, "there are no black holes where wrongdoers can hide in the Isle of Man" (Secilpar S.L 2003-05 MLR 352, paragraph 57).

No fishing allowed

Cases from Jersey , Singapore and England relating to the international exchange of tax information were considered, and OECD commentary discussed regarding definitions of "foreseeably relevant", and confirming that information does not have to be provided in cases of "fishing expeditions" , being "speculative requests that have no apparent nexus to an open inquiry or investigation" (See paragraph 17-18 of the judgment).

Knockout blow

In summarising the position in Manx Law, Deemster Doyle states, at paragraph 127, that:

"The Island does not and should not shelter those who do not comply with the law and pay their taxes. The Island does not and should not facilitate wrongdoers attempting to evade tax in their home jurisdictions. We should assist others in ensuring that legal obligations, including the payment of tax, are complied with worldwide".

The Assessor must in each case be satisfied that a request from a foreign tax authority, "falls within the relevant provisions" (paragraph 129). Clarification may be requested but "the effective provision of information must not be unduly prevented or delayed."

Recipients of requests would need to produce evidence amounting to a "knockout blow" which seriously undermines the Assessor's reasonable opinion, to resist a request for disclosure under a TIEA.

The Deemster warned recipients of the "adverse consequences that may follow if they do not provide prompt and full cooperation" (paragraph 132). These may include adverse costs orders, contempt orders and fines.

Challenges to requests

As noted above, businesses face difficulty in balancing compliance with the law and ensuring that their own position in terms of potential claims against them is protected. In addition, in an environment of ever escalating compliance requirements, the time and costs of responding to an information request can be onerous.

The view of the Court in response to such concerns is made clear, "Any misplaced feeling of loyalty to ... clients or others and any commercial or business concerns must of course take second place to the requirement ... to comply with the law. They should not raise unreasonable points ... or invite the Assessor ... to conduct unnecessary further enquiries" (paragraph 133).

As noted in the judgment, if a recipient is "in any doubt as to the legal position or the relevance of the documentation and information in its possession or power" he or she "should take legal advice" (paragraph 139).

Compliance with a request is not easy and each should be considered carefully and in detail. Reasonable queries may and should still be raised in appropriate cases and clarification requested where necessary.

In a recent development, we await the decision of the Guernsey Court regarding a challenge of a decision by Guernsey's tax director to grant a TIEA request from the Indian tax authority. Further case law is expected in this evolving area.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.