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Taxation of image rights: contracts and commerciality

When implementing image rights contracts, employers must make concerted efforts to demonstrate the underlying commerciality of the arrangement by monitoring ongoing activities, write Liesl Fichardt and Emily Au (Quinn Emanuel Urquhart & Sullivan).

Image rights arrangements are back in HMRC’s crosshairs. This is perhaps not surprising especially given the prominence of commercialised social media as payments for individual sportspersons or celebrities’ image rights come under regular scrutiny. When a payment for the use of an individual’s image is made to an image rights company it may be suspected that the payments are earnings rather than a commercial payment for exploitation of an image. As a result it has become increasingly important to distinguish between employment contracts and image rights contracts in form and substance.

In this context the sports world is yet again in the spotlight; HMRC’s image rights guidance and investigations...

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