In Hull City AFC (Tigers) Limited v HMRC [2019] TC7074 the FTT decided that payments made to Geovanni Gomez’s offshore company under an image rights contract were employment income and not consideration for the licensing the footballer’s image rights.

  • Hull City (the Club) signed Geovanni Gomez on a 2-year Playing Contract following his release by Manchester City in July  2018.
  • Once the season started on 7 November 2008 an Image Rights Agreement was signed in respect of Geovanni’s overseas image rights between the Club and Joniere Limited (“Joniere”), a company registered in the British Virgin Islands.
  • During Geovanni’s employment with the Club, it paid Joniere a total of £440,800.

HMRC claimed that this sum was earnings of Geovanni and issued Directions under Regulation 80 Income Tax (Pay as You Earn) Regulations 2003 and Decisions under Section 8 Social Security Contributions (Transfer of Functions) Act 1999 for tax years 2008-09, 2009-10 and 2010-11.

On appeal to the First Tier Tribunal, Geovanni argued that the payments were not earnings.

  • He claimed that the Image Rights Agreement gave the Club the exclusive right to “use” Geovanni for promotional purposes of the Club, its partners and third parties globally.
  • The Image Rights Agreement did not licence UK rights and the rights granted by the Player’s Contract were very limited. 

The FTT found that:

  • The Club did not have a plan or the resources to exploit Geovanni’s image rights.
  • It had not valued them and there was no evidence as to how it had arrived at the sums paid.
  • The Image Rights Agreement was not a sham: it granted rights to the Club to exploit Geovanni’s overseas image rights, although these rights had no commercial value.

The Club viewed the sums payable under the Playing Contract and the Image Rights Agreement as an overall package. In reality payments to Joniere were a reward for Geovanni’s services as a footballer and formed part of his earnings.

Useful tax guides

Image Rights & Tax
Following developments in the taxation of image rights. 

Golden handshakes and unusual payments
A handy tracker of cases where an employee may receive a payment or fee that is not described or treated as remuneration.

External links

Hull City AFC (Tigers) Limited v HMRC [2019] TC7074