Image Rights have for quite some time been used by savvy tax advisers to professional athletes who can significantly increase net earnings by effectively taking part of their remuneration as consideration of a licence to their employer for the exploitation of their image. Both parties benefit from the arrangement as the licence fee is usually made payable to an “image rights company” (to which the athlete has transferred such rights) and corporation tax is therefore payable rather than income tax, and the employer reduces it’s national insurance liability.

HMRC have previously voiced their concerns (unsuccessfully bringing a claim in 2000 against a premiership club for image rights payments made to two players) that the level of remuneration channelled through this process is, in some cases, unjustified (i.e. the value of the image rights of the athlete concerned are overinflated and do not reflect their true worth, as a means to avoid tax).  However, this is a subjective test and the value of an athletes image is obviously not readily quantifiable, a scenario which inevitably results in dispute and litigation.

The rumour that HMRC are prepared to try again does however suggest that they are determined to get somewhere with this and the current economic climate (along with some rather untimely comments by premiership footballers claiming they are the epitome of self-sacrifice!) will do nothing to win the sympathy of the general public.

The DTM Sports Team work alongside experienced tax professionals to advise on the legal documentation required to implement the appropriate tax planning.