VAT debt has spiralled since the Covid pandemic.

Figures released by Treasury reveal that at the end of September this year 589 businesses were in arrears with their VAT payments and actionable debt totalled more than £36.8m.

Non-actionable debt, which are not due for immediate payment or there is a valid reason for the payment to be withheld by the taxpayer, totalled no less than £99.2m.

Before Covid struck in 2020, actionable VAT debt stood at around £13m and non-actionable debt at just over £30m.

Treasury Minister Dr Alex Allinson gave the figures in a written reply to a Tynwald question from Douglas North MHK David Ashford.

Mr Ashford asked how many individual businesses had been in arrears with their VAT payments in each quarter of the last five years, and what was the total value of those arrears.

Mr Allinson said the overall number of debt cases increased substantially in June 2020, following the closure of the Covid-19 VAT Deferral Scheme which had allowed businesses to defer the payment of any declared liabilities.

Subsequently there was an increase in the value of non-actionable debt and a decrease in the value of actionable debt between March 2020 and June 2020.

Actionable debts of £36,880,379 at the end of September this year included 377 civil recovery cases where action has been taken as payment was more than 14 days overdue.

Of the non-actionable debt, just over £80m of the £99,219,019 total involved on-hold cases of which £65.6m (81%) concerns a single case that has been appealed by the business following a VAT tribunal ruling.

The appeal is expected to be heard in spring 2024 and the further treatment of two other on-hold cases, with debts totalling £8.79m, will depend on the result of that appeal, Dr Allinson said.

Media IoM reported in September that a tribunal had ordered £36m of VAT to be paid on a superyacht.Motor yacht MY Amadea was bought from a firm of German shipbuilders in March 2017 at a price of €217m (£184m).

It was seized in Fiji in May last year at the request of US authorities investigating its alleged links to a sanctioned Russian oligarch.

The company set up to acquire the yacht had registered for VAT in the Isle of Man, imported the vessel here and reclaimed import VAT on it of £36.8m. Then later in the same year, while the MY Amadea was in Montenegro, the company applied to deregister for VAT.

Isle of Man Customs and Excise raised an assessment in May 2021, seeking payment of output VAT plus penalty. But the company argued no VAT was owed as the yacht had been outside the Isle of Man at the time of deregistration. It took its case to the VAT and duties tribunal which ruled against it.