HMRC and United settle image rights dispute
Dispute over salary sidestep to avoid income tax is settled
A DISPUTE BETWEEN the taxman and Manchester United over image rights written into player contracts has been resolved, according to reports.
The taxman has been unhappy with the use of image rights by football clubs, which it believes has been taken advantage of to enable players to avoid higher rate income tax.
However, issues between Manchester United and HMRC have been resolved, reports the Times.
The clubs effectively pay a proportion of a player’s salary for the use of their image. The payment is made to a separate company owned by the player, which would usually offer much lower tax rates than if the payment was treated as income.
The issue of gauging what is a genuine level of payment for image rights, rather than merely a tax avoidance tool, has proved troublesome for many years.