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HMRC internal manual

Employment Income Manual

Employment income: general: payments for “image rights”: use of a company

Use of an image rights company

Where an individual has a public profile, they may be offered payments from those seeking to exploit their image on a commercial basis.

In recent years it has become common for sportspersons, entertainers and other celebrities to assert that they have assigned an asset, often described as their “image rights”, to an image rights company (IRC), which they may control by holding an interest in the issued share capital (directly or indirectly).

The person’s name may be registered as a trademark and the individual’s signature, nickname or caricature may also be a registered trademark.  Where such rights are assigned to an IRC, the transfer is often referred to collectively and inaccurately as a transfer of “image rights”. 

The IRC may seek to exploit the individual’s “image rights” that have been assigned to it, by licensing third parties to use an aspect of the individual’s image in return for royalty payments. The individual who assigned the “image rights” to the IRC may be employed by the company, or hold office as a director. The income derived from exploitation of the image rights belongs to the IRC. In common with any other company, if the individual is employed and holds shares, reward may be received by the individual in various forms including as salary and as dividends.

Sports Club

It is often asserted by sportspersons, entertainers and other celebrities and their agents that they have assigned their “image rights” to a company (the IRC) for the purpose of exploitation in the media and for promotional purposes. The individual may agree to perform services in connection with the licensing of their “image rights”. For instance, a football club may license the “image rights” from a player’s IRC for commercial purposes - e.g. the club may enter into an agreement with a commercial partner to enable the commercial partner to use the player’s image in publicising its link with the club.

The justification for this argument usually quoted is based on the Sports Club case (see EIM00736). This was a decision of the Special Commissioners published in anonymous form as Sports Club plc and others v CIR (SpC253, [2000] STC (SCD) 443). As the Inland Revenue did not appeal, the case did not progress beyond the Special Commissioners, so the decision is informative rather than having created precedent.