The recent Hull AFC versus HMRC tribunal judgement has been examined in an article by Jon Elphick which was published in Taxation magazine. https://www.taxation.co.uk/Articles/image-rights-and-hmrc
Jon’s analysis centres on “Geovanni” who is a well known, retired Brazilian footballer. He was signed to Hull City AFC Tigers in 2008 by way of an employment contract. However, his package also included an arrangement with a BVI company called “Joniere Ltd”. This provided Hull with the right to exploit Geovanni’s non-UK image rights commercially. In return, Hull paid an annual fee of £187,200.
These arrangements grew in popularity from the 1990s as football clubs used them to attract international players. This was because these commercial arrangements, although taxable on the individual, were not subject to payroll taxes.They were also advantageous for players who were non-doms.
In the mid to late 90s HMRC cracked down on many image rights arrangements and ordered Hull to be assessed for PAYE and NICs contributions in relation to its employment of Giovanni. Inevitably, the case reached the First Tier Tribunal who accepted that the arrangements did grant genuine rights. However, it agreed with HMRC’s approach that the substance of the arrangements should be considered, rather than their legal form. As a result, their findings provide an essential guide for tax advisers setting up image rights arrangements.
Significantly, Geovanni has now returned to his home country at the end of his career. This underlines the benefits of keeping foreign earned income in a vehicle suitable for tax efficient access in retirement.
Jon Elphick is a Director at Mark Davies & Associates, specialising in the taxation of
non-doms and internationally exposed clients. He can be contacted on 0203 770 5602 or