Taxation of image rights – recent developments

We outline some recent developments regarding HMRC’s latest investigation into the taxation of image rights in football in England.

Image rights companies in English football – Background

Image rights contracts first emerged in England in the 1990s and have become widely used in the time since. In English football, image rights arrangements became especially prevalent after the tax authority’s (the HMRC) defeat in the Sports Club v HMIT case in 2000 involving Arsenal FC, David Platt and Dennis Bergkamp.

As a result, it is common now for clubs to offer players a remuneration package that included their basic wage under their employment contract for their on-field and training performances and a separate image rights payment for commercial revenue, payable under a separate agreement with the player’s Image Rights Company (IRC). HMRC has often sought to scrutinise the image rights deals reached between players and clubs, especially with overseas structures, claiming that these are simply “disguised remuneration”, which should be subject to PAYE and National Insurance Contributions (NIC).

However, footballers, clubs and agents should be aware of recent developments, which HMRC asserts have cast some doubt over the validity of current image rights agreements.

What are image rights and image rights companies?

Image rights refer to an individual’s proprietary right to (among other things) their individual name, physical characteristics, personal likeness or personal marks (such as their signature). However, under English law there is no identifiable intellectual property right in an “image right” per se. The recent high profile Rihanna case reconfirmed the principles established in the Irvine v Talksport Ltd case when the Court stated that “there is today in England no such thing as a free standing general right by a famous person (or anyone else) to control the reproduction of their image”.

Nevertheless, in recent years it has become common for footballers to assign an asset, often commonly referred to collectively as a transfer of “image rights” to an IRC. There are numerous important tax and commercial issues that players (and their agents) need to consider when establishing an image rights company. In fact, the settlements that HMRC reached with Premier League clubs in 2012 in relation to image rights payments indicated that HMRC had broadly accepted the concept of image rights - which other parts of HMRC now seeks to challenge.

Recent developments and HMRC’s new challenge

Off the back of the Rihanna case HMRC have now turned their attention once again towards IRC arrangements in football. The gist of the argument raised by HMRC is that players are creating a company (often with little or no assets in it), then assigning a right to the company which technically does not actually exist under English law – as confirmed in the Rihanna case.

Moreover, HMRC is also questioning the commerciality of the IRC arrangements as the assignment of these rights is sometimes made for a nominal fee and there may be no other underlying contractual agreements or assets that indicate the IRC does anything other than exploit the player’s “image rights” with his club. Importantly, HMRC argues that any income generated by the IRC fundamentally emanates from the player’s profession as a footballer and any ancillary “rights” deriving income (such as their “image rights”) ought to be treated as arising from the same source. Accordingly, HMRC believes that the income of the IRC should ultimately be treated as taxable income in the hands of the footballer, and thus subject to PAYE and NIC rather than the lower rate of corporation tax of the IRC (particularly when these are based off shore).


In an era of record breaking Premier League broadcast revenue, there is strong competition between clubs to be promoted to the Premier League, stay in the Premier League (and ultimately qualify for the holy grail of UEFA competitions). To achieve these aims, there is a clear need to attract the best talent, which results in clubs enticing players with very lucrative global remuneration packages. Accordingly, the negotiation and structuring of image rights payments has increasingly become an integral part of contract negotiations between clubs and players.

In light of the Rihanna case, HMRC has turned its attention towards this issue once again. Notwithstanding that case and the HMRC developments, the validity of any IRC structure would of course depend on the characteristics of each individual arrangement. It also appears that HMRC is open to negotiated settlements in certain circumstances. 

It will be interesting to see how HMRC’s latest attempt to attack IRCs in football plays out as it could potentially have significant ramifications for numerous sportsmen and women and their employers in the UK.

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