payment for image rights

payment for image rights

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Is a payment to a UK resident individual for their image rights under an overseas EU employment contract liable to UK Class 1 national insurance (the individual has been issued an A1)?

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RLI
By lionofludesch
25th Oct 2017 16:31

In theory, probably not (you'd need to look at the contract).

In practice, HMRC have got stuck into this in a big way recently, particularly with sports people, and assert that the reality is that these aren't payments for image rights at all, they're remuneration for kicking balls about (or hitting them with sticks or whatever).

Obviously rebuttable but it's a long tough road.

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By nick farrow
25th Oct 2017 16:44

many thanks Lion - as the individual concerned is being paid in respect of modelling work it may be easier to establish that is payment for their image

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Portia profile image
By Portia Nina Levin
25th Oct 2017 17:01

nick farrow wrote:

many thanks Lion - as the individual concerned is being paid in respect of modelling work it may be easier to establish that is payment for their image

Or more difficult. If Brand X pay a kickballer's image rights company €100M for them being associated with brand X, it is likely that the payment is for the use of their image (or "personal brand") generally. In the case of a model, on the other hand, it is more arguable that it attaches to the assignments in which their image was captured, rather than in relation to their attachment to the brand. Depending on the facts, this distinction may be academic though.

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Replying to Portia Nina Levin:
RLI
By lionofludesch
25th Oct 2017 17:22

I agree. Modelling looks like work. Standing in front of the camera may seem passive but the model has to be there, posing.

Having your picture stuck on some tat in the club shop looks far less like work. The issue there is whether there's a fair split between the payment forf the work and the payment for the image.

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By nick farrow
25th Oct 2017 17:18

thanks Portia I take your point but in this case I am reasonably happy that the personal brand argument works. there are other payments made for the actual work which will be subject to nic

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paddle steamer
By DJKL
25th Oct 2017 17:28

Surely there always are, if the newspapers are to be believed this does not deter HMRC re footballers.

(there was one such HMRC interest reported just a week or two ago, though now cannot remember who it was)

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Replying to DJKL:
RLI
By lionofludesch
25th Oct 2017 17:33

It's rife, DJKL.

In truth, the fact that there are payments for this and payments for that exacerbates, rather than ameliorates, the problem. The whole issue is about fair split and it's not easy to negotiate.

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By nick farrow
25th Oct 2017 17:44

the split is fair in this case by reference to what he/she gets paid as an actor

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By Portia Nina Levin
25th Oct 2017 17:57

He/she?

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RLI
By lionofludesch
25th Oct 2017 18:02

Portia Nina Levin wrote:

He/she?

Or they ?

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Replying to nick farrow:
RLI
By lionofludesch
25th Oct 2017 17:57

You say so - do HMRC agree ?

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By nick farrow
25th Oct 2017 18:10

I meant "I think it is fair by reference to what they get paid when acting" - I will report back if I get any guidance to the contrary

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By David Heaton
26th Oct 2017 13:55

The question says that an A1 has been issued, and that there is an employment contract entered into with an EU employer, but the facts are incomplete.

An EU model working under an EU employment contract could easily be UK resident for tax purposes with no UK NIC liability, but a UK-origin and -resident model could have an EU employment contract and still be within UK NIC. If there is regular work in several member states, the UK may be competent because that is where the model is habitually resident. The EU test is based on *habitual* residence, ie, long term, not just residence in a particular tax year. Residence in UK terms for just a year or two would ordinarily be classed as merely a 'stay' in EU terms, not 'residence'.

Which social security authority issued the A1 - UK or foreign? That settles the question of competence (ie, which state has the right to levy contributions and the obligation to pay benefits).

If the model is insured in the UK, the questions relevant to the football cases are relevant to whether there is a payment of NICable earnings. If insurance lies with a foreign authority, the UK's stance on image rights payments is irrelevant, as no NICs can be due.

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By nick farrow
26th Oct 2017 17:11

thanks David the individual is habitually resident in the UK,the UK issued the A1 and the individual has other employment income in the UK

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By SXGuy
30th Oct 2017 12:05

Arnt these arguments for class 1 nic based on footballers who receive royalties from a middle man company? Surely the argument changes when it's a direct payment? What I mean is. Hmrc obviously are going after those avoiding it by using a middle man when in reality it should be a direct payment?

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