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In a recent tax case fought between Hull City Football Club and HMRC the First Tier Tribunal decided that payments made to the Hull City player Geovanni Gomez’s offshore company under an 'image rights' contract were actually employment income and not payments for the licensing the footballer’s image rights.
Hull City signed Geovanni Gomez on a 2-year Playing Contract following his release by Manchester City in July 2018. An Image Rights Agreement was signed in respect of Geovanni’s overseas image rights between the Club and Joniere Limited, a company registered in the British Virgin Islands, so paying no UK tax.
During Geovanni’s employment Hull City paid Joniere a total of £440,800. HMRC claimed that this sum was really earnings of Geovanni.
On appeal to the First Tier Tribunal, Geovanni argued that the payments were not earnings. He claimed that the Image Rights Agreement gave the Club the exclusive right to “use” Geovanni images and brand for promotional purposes of the Club, its partners and third parties globally.
The First Tier Tribunal found that:
It agreed that the Image Rights Agreement was not legally a sham because it did actually grant rights to the Club to exploit Geovanni’s overseas image rights, although in reality these rights had no commercial value because in common with most of us, no- one had heard of this player before now!
The Tribunal also stated that Hull City viewed the sums payable under the Playing Contract and the Image Rights Agreement as an overall package.
In reality payments to Joniere were a reward for Geovanni’s services as a footballer and formed part of his earnings.