HMRC has continued to intensify its scrutiny of image rights arrangements involving professional athletes, particularly within football, as part of its broader focus on perceived tax avoidance in the sports sector.
Image rights broadly encompass the commercial value associated with an individual’s name, likeness, signature and reputation. In the context of professional sport, these rights are commonly exploited through sponsorship, endorsement and media-related activities.
It has historically been common practice for high profile footballers to assign these rights to a personal company, with clubs and third parties making payments to that company rather than directly to the individual. From a tax perspective, this structure gives rise to a fundamental distinction. Payments treated as employment income are subject to PAYE deductions for income tax and National Insurance Contributions, whereas payments made to a company are subject to corporation tax, with further tax arising only on cash being extracted.
While such arrangements have been long established, HMRC’s position is that, in several cases, purported image rights payments do not reflect genuine commercial exploitation but instead represent disguised remuneration for the player’s services as an employee. HMRC’s analysis typically focuses on whether the level of payments can be justified on an arm’s length basis, considering the player’s commercial profile and the actual value generated for the club or third parties.
We are aware that HMRC recently issued significant tax assessments seeking to change payments made to image rights companies as employment income for several unnamed premier league players from a high-profile club. These cases relate to the 2021/22 tax year as HMRC is within the four-year timeframe to raise an assessment for the years in question. This suggests a renewed and targeted compliance approach in this area.
In light of this, it is important that players and clubs do not assume that HMRC’s initial assessments are correct or should be accepted without challenge. It is not uncommon for initial positions to be based on incomplete information or broad assumptions. A robust and evidence-based response is, therefore, essential.
As part of this process, we recommend that affected players and clubs undertake a detailed review, including:
- A comprehensive analysis of the player’s non-playing contractual obligations to the club
- Identification of appearances and activities undertaken as part of those obligations, including the jurisdictions in which they occur
- A clear distinction between contractual duties and genuinely separate commercial activities; and
- An assessment of the commercial value derived from the player’s image rights, supported where possible by comparable market data.
Undertaking this analysis may enable players to respond to HMRC enquiries from a position of strength and demonstrate that the payments made reflect genuine commercial arrangements rather than disguised employment income.
In addition to this, HMRC took Bryan Robson to court (Bryan Robson vs HMRC case) for his role as a global ambassador for his former club, Manchester United. Services were provided via his personal service company with guest appearances, speaking engagements and the use of his image. HMRC argued that the arrangement was effectively an IR35 issue (i.e. employment income).
The decision was a slightly mixed result. HMRC was successful in arguing that Robson’s attendance as a global ambassador was akin to employment income.
However, the elements of payment that related to his image rights were not overturned, with HMRC willing to apportion the income between employment and non-employment income streams. Robson supported the split by including express contractual provisions granting Manchester United separate rights to exploit his image.
He successfully demonstrated that those rights had independent commercial value distinct from his personal appearance obligations, which the tribunal accepted despite the absence of a formal valuation exercise.
This case again shows the need for good record keeping for both club and player.
Looking ahead, forthcoming changes to the taxation of image rights arrangements, expected to take effect from April 2027 (April 2027 changes), are likely to further restrict the ability to structure such payments through corporate vehicles. This increases the importance of ensuring that both existing and future arrangements are carefully reviewed and appropriately supported.
We have considerable experience of dealing with both clubs and players when HMRC raise an enquiry into their affairs and therefore would be happy to assist anyone affected.
For more information or to discuss your personal circumstances, please contact your usual Crowe advisor.
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