Rank amateur surrounds cold island (7)
I believe the answer is:
majorca
'island' is the definition.
(Majorca is a Spanish island)
'rank amateur surrounds cold' is the wordplay.
'rank' becomes 'major' (military rank).
'amateur' becomes 'a'.
'surrounds' means one lot of letters goes inside another.
'cold' becomes 'C' (eg on taps).
'major'+'a'='majora'
'majora' going around 'c' is 'MAJORCA'.
(Other definitions for majorca that I've seen before include "Main Balearic island" , "holiday resort" , "Holiday island" , "holiday destination ..." , "Tourist destination" .)