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Manchester United - Image Rights

Manchester United - Image Rights

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Just read an article regading HMRC investigating Manchester United over image rights contracts handed out to players.

Allegedly, "The tax office argue the image-right payments are taxable but the club dispute this, so the matter is heading for the courts. United say they will face a bill of at least £5.3million if they lose."
 

It left me wondering what reason there could be for these payments not to be taxable?  Any Ideas?

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By Anonymous
12th Jan 2010 13:03

my understanding....

...is that the summary in the article is a bit misleading....

i believe the argument HMRC put forward is that the payments should be PAYE income and therefore Man Utd should have deducted tax and NIC at source.

what has actually happened is that the club will have made gross payments to a players image rights company, which declares the income as taxable...and pays corporation tax accordingly.

the company also has expenses that it offsets against the income that the player would otherwise be unable to do if the income was employment income....eg. the image rights company may employ members of the players family.

so both player and man utd save on the nic and the player also has access to expenses that he would otherwise be unable to claim relief for.

thanks

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12th Jan 2010 17:03

Wayne

I have a picture of Mr Rooney on my mantle to keep the kids away from the fire

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By Anonymous
13th Jan 2010 13:12

Ref! That was miles offshore!

I suppose that a further aspect to this is that a large proportion of pro footballers playing in the UK are not domiciled here. So if the image rights are held offshore there's another range of avoidance options.

A pro football club these days is a multinational business with a nice park attached. They all make the right noises about being involved with the community but the days are long gone when they had any true attachment. Hence the recent shenanigans at Liverpool.

Interesting fact 1: when Celtic won the European Cup in 1967 every member of their team was born within 30 miles of Parkhead.

Interesting fact 2: how many ManUtd supporters does it take to change a lightbulb? The answer is two - one to change the lightbulb and another to drive him up from Basingstoke... 

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13th Jan 2010 14:41

It's not just Man U

If Man U lose this case it will affect sport all over as this practice isn't confined to football.  It goes on widely in rugby league for example and although the numbers are much smaller the implications for the survival of clubs etc could be relatively greater.  It's a pratice that has long been abused and the Revenue are seeking to crack down on it as I understand players have been paid more in rights than they have in salary!  All anecdotal bloke down the pub stuff but it's as fun as accounting gets when it relates to top class sport.

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