George Davies 'recovers' over £1m for Image Rights Companies

The George Davies Sports Team have recently recovered £1,200,000 in image rights payment owing to a number of players Image Rights Companies (Companies) in the past six months.

 It has been widely reported that HMRC have investigated the payments made to the Companies arguing that such payments are “disguised remuneration” and that they are simply set up to avoid tax.  In response to the investigations, some clubs have simply stopped making payment or are stating that a percentage of the amounts are in fact taxable now that the Premier League clubs have made an agreement with HMRC.  However, as Sports Solicitor Matthew Chantler explains, the clubs often have no legal argument to withhold such payments:

 
“Even though the clubs are taking a tough stance on this issue, it is often the case that under the Image Rights Licence (Licence) they are unable to withhold monies.  There is often no right to ‘set-off’ or deduction; in fact the Licence agreements are often poorly drafted.  Further there is often no indemnity, whereby the Company indemnifies the club against any tax liability that may fall due under the Licence.”
 
“Therefore if the club wish to withhold payments simply because HMRC are investigating then they may no be able to.  If the club is in the Premier League, then if they wish to account for tax as per the agreement between the Premier League and HMRC, then the tax liability may be the club’s responsibility and not the Company’s depending on the drafting of the Licence.  If the Licence does not provide that the Company has to account for any tax then the tax liability is, and remains, the club’s liability – PAYE is primarily the responsibility of the employer.”

 

For further information or advice, please contact one of our sports law specialists below.

Mark Hovell

Call Mark Hovell on 0161 234 8810 or send an email

Matthew Chantler

Call Matthew Chantler on 0161 234 8719 or send an email


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