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A matter of image? A matter of celebrity!!

Hull City, the home town club of Schofield Sweeney's James Staton, is embroiled in a tax dispute with HMRC in which its former player Geovanni Gómez transferred ownership of his image rights to a British Virgin Islands company thus avoiding UK income tax on the BVI company's income from The Tigers.

The claim by HMRC is an attempt to reopen the issue of image rights taxation in sport, 17 years after a tax tribunal decided that high-earning sports stars were entitled to manage their image rights in this way.

Although English law does not recognise an image right in general, those who are at the top of the sporting and entertainment worlds, "(so called celebrities)" do enter into image right contracts which are essentially a combination of rights, including trademarks, privacy rights, and passing off rights.

Whilst the man or woman in the street does not have an image right to protect, celebrities may do so.  In a case involving Wayne Rooney the court said:

"Image Rights means the right for any commercial or promotional purpose to use the Player's name, nickname, slogan and signatures developed from time to time, image, likeness, voice, logos, get-ups, initials, team or squad number (as may be allocated to the Player from time to time), reputation, video or film portrayal, biographical information, graphical representation, electronic, animated or computer-generated representation and/or any other representation and/or right of association and/or any other right or quasi-right anywhere in the world of the Player in relation to his name, reputation, image, promotional services, and/or his performances together with the right to apply for registration of any such rights."

In the Tigers' case, HMRC alleges that the agreement was a sham, under which Hull paid the BVI company large sums in lieu of salary to keep the player's income and national insurance contributions out of the UK tax net.  That is denied by the club.

The Tigers argue that the burden of proof to show the scheme was illegitimate rests with HMRC but HMRC disputes that arguing that it can issue directions on tax liabilities, and that it is for the club to produce sufficient evidence to prove that, on the balance of probabilities, HMRC is wrong.

The Tax Tribunal has accepted some of Hull's arguments deciding that the taxpayer has the burden of proof of showing that a validly assessed direction by HMRC is incorrect, but requiring HMRC to serve its witness evidence first so that City can take it into account in preparing its factual evidence.

An interesting insight into the world of celebrity tax and the additional rights and responsibilities fame can bring.

To speak to a member of our Litigation team, call 01274 306 000.

About the Author

James Staton


James is a Partner and Head of the Dispute Resolution team and primarily handles commercial…

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