I had a number plate made up in the Isle of Man.
Police over here said it was illegal.
Is that true? Does anyone know the law?

Yes, it's illegal.
My previous bike had a plate I bought on the island for 5 years.Still has, actually.
Got pulled by the Derbyshire plod (bless 'em), strictly a safety check, you understand (yeah right), and the numpty in a uniform thought I was from the IOM! And sent me on my way. Other than that, no hassle whatsoever.