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HMRC internal manual

Employment Income Manual

Employment income: general: payments for “image rights”: examples of issues to consider

Commerciality should be at the heart of an agreement between an employer and a company established by an employee for the exploitation of image rights. Without being prescriptive, HMRC expects this to be demonstrable.

The employer may consider keeping records covering:

  • consideration given by the Board of Directors to the active use of image rights as a benefit to the commercial activities of the employer, whether to seek new agreements, reviews of the outcome of existing agreements, and the possibilities for increased value additional to rights existing under the employment contract
  • a business plan for promotional activities involving the exploitation of image rights and the outcome of reviews of performance against that plan, including details of actions taken if the employer is not realising a commercial return from an image rights agreement
  • negotiation of the terms of each image rights agreement to demonstrate consideration on an individual basis and to reflect any differences between the exploitation of image rights within and outside the UK
  • details of independent advice received regarding the valuation of the image rights, or internal analysis of value based on previous experience
  • due diligence regarding the image rights company and any advice provided to the employee regarding the establishment of an image rights company
  • records of activities performed and any subsequent discussions about the performance of services under the image rights agreement and actions taken