Branded in the media and by politicians as tax dodges, HM Revenue and Customs (HMRC) and the Government have been under pressure to close the image rights loophole, particularly for football players and clubs. As well as announcing a focus by HMRC on football clubs with a series of visits, the Chancellor’s Spring Budget 2017 included a promise to publish guidance on the taxation of image rights. The UK is not the only country looking to tax the profits generated from international image rights. In Spain, most notably, this has resulted in high profile criminal prosecutions and fines.
HMRC’s guidance focuses on when image rights income should be taxed as employment income, but there is an international tax element to this issue which is not well understood. Even with the published guidance, the taxation issues remain complex and following the introduction of criminal corporate offences for failing to prevent tax evasion and eye watering levels of penalties for failures to correctly report tax liabilities, particularly where there is an international element, any person exploiting or paying for the use of image rights needs to make sure that they and their advisers have got the tax right.
Not just a loophole
It would be easy if image rights were just a loophole for Premiership clubs and highly paid footballers to avoid paying tax on part of their salary - the loophole would be closed and clubs would simply stop offering separate contracts. The position is far more complex than the press coverage would suggest. An...
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